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Berkshire Hathaway CEO Warren Buffett said Saturday that regulators averted financial disaster by ensuring that the Silicon Valley bank’s customers did not lose money in the firm’s collapse.
The sudden collapse of SVB in March forced the Federal Deposit Insurance Corp. to seize the bank, and sold some of its assets to First Citizens a few weeks later.
The FDIC protected SVB customers in the process. systemic risk The exception, during the March turmoil, allows the regulator to freeze all deposits in full, even if their accounts exceed the $250,000 coverage limit.
“It would have been disastrous if the regulators had not done this,” Buffett said during his annual shareholder meeting.
Shareholders Warren Buffett and Charlie Munger look on from the overflow room during Berkshire Hathaway’s annual meeting in Omaha, Neb., on Saturday, May 6, 2023.
Rebecca H. Gratz | AP
Allowing uninsured depositors to lose money “will begin to impact every bank in the country,” he said.
So the move, which was criticized because it protected venture capital investors, startups and other sophisticated players, was “inevitable” in Buffett’s view.
Protecting uninsured depositors resulted in the FDIC’s deposit insurance fund losing the estimated $20 billion it received in the SVB receivership. The largest US banks are expected to cover its economic cost through special fees.
This story is developing. Please check back for updates.
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