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Warren Buffett said that Americans should not be worried about their bank deposits in the wake of the latest financial shock in the region and the government will ensure that no depositor in this country loses a single penny.
“People should not be worried about losing their money and deposits in a U.S. bank, and today, they have no reason to worry,” he said. Berkshire Hathaway The chairman and CEO in an interview with Becky Quick from Tokyo on CNBC’s “Squawk Box” on Wednesday. “But the messaging has become very confused and people don’t really understand how it all works.”
The banking sector went through a brief panic in March as depositors fled Silicon Valley Bank, which had mismanaged its bond portfolio and was excessively leveraged to the tech industry. Fears grew that depositors with FDIC insurance limits above the $250,000 limit would lose their money. But over the weekend on March 12, the government refunded all depositors of Signature Bank as well as SVB, regardless of the amount of money they had with the banks.
Buffett said the government would likely step in to support all depositors at all U.S. banks if ever necessary, though he also said it would require congressional approval.
When asked if Congress would approve that extraordinary action, he said, “We’ll be fine.” Buffett said Congress would also adjust the debt ceiling to save the country from financial ruin.
The closure of banks has led to a crisis of confidence among investors and customers as they have raised questions about whether other financial institutions may face a similar fate. Bank stocks fell largely in March as investors lost interest in the sector, with the selloff particularly concentrated at regional banks amid liquidity concerns. 11 banks deposited $30 billion to restore confidence First Republic BankWhose shares have fallen during the shock.
Buffett said that if there were more bank failures, shareholders could suffer losses and rightly so, but depositors should not be worried.
buffett’s father
Bank closings are an issue that has affected Buffett personally, he said, noting that his father lost his job and savings in the 1930s when the bank he worked for failed.
But since the Great Depression things have changed in a positive way in terms of regulations and knowledge of bank operations and what such things can do to the financial system. The Federal Deposit Insurance Corporation was created during the Great Depression.
Buffett, 92, said he was so confident that American depositors were safe that he would put one million dollars of his own money into a bank and challenged anyone else to do the same. He said that if only one American lost his deposits due to bank closure, he would donate that money to charity at the end of the year, but if American depositors remained intact, he would keep the other person’s money. .
He said, “If an American depositor lost money due to a bank failure, another soul would have to explain where the $2 million went to, which charity.” “If they don’t do it, I’ll get paid. And it’s a solid offer, and we’ll see who steps forward.”
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