Personal Finance

Buffett: More bank failures possible

Billionaire investor Warren Buffett said in an interview that there is a possibility of more bank failures in the future amid the collapse of two U.S. banks last month. 

“We’re not over bank failures, but depositors haven’t had a crisis,” Buffett said during an appearance on CNBC’s “Squawk Box” Wednesday. “Banks go bust. But depositors aren’t going to be hurt.”

Buffett, the chairman and CEO of Berkshire Hathaway, also said that there has been new focus on some of the “dumb” things banks occasionally do, like having mismatched assets and liabilities.

“Bankers have been tempted to do that forever,” Buffett told CNBC, adding that some bankers will continue this behavior, which will put the shareholders in some of the stocks at risk.

“Accounting procedures have driven some bankers to do some things that have helped their current earnings a little bit and caused the recurring temptation to do get a little bit bigger spread on record, a little more than earnings.”

Buffett added that there was some unnecessary concern about depositors losing their money, as the system was already set up to protect the entire nation’s deposits, according to CNBC. 

“The costs of the FDIC are borne by the banks. Banks have never cost the Federal Government a dime. The public doesn’t understand that,” Buffett added. “Nobody is going to lose money on a deposit in a U.S. bank. It’s not going to happen … you don’t need to turn a dumb decision by managers into a panicking the whole citizenry of the United States about something they don’t need to be panicked about.”

Buffett’s remarks come a month after regulators shut down the Silicon Valley Bank and Signature Bank, marking the second and third largest banks collapse in U.S. history, following the 2008 financial crisis and recession.

Sen. Elizabeth Warren (D-Mass.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) recently sent letters to 14 of Silicon Valley Bank’s largest depositors on Monday, voicing their concerns about the relationship between the failed bank and some of the largest venture capital firms that invested in it.

Tags Alexandria Ocasio-Cortez Alexandria Ocasio-Cortez bank failures Elizabeth Warren Signature Bank Silicon Valley Bank failure Warren Buffett

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