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Speaking on CNBC television, the billionaire chairman of Berkshire Hathaway (NYSE:BRKa) Inc said that while more banks will fail, the industry’s recent problems do not resemble those that helped trigger the 2008 global financial crisis.
People “do not need to be panicked” about the banking industry and “shouldn’t be worried about deposits they have in an American bank,” a message that has recently gotten “confused” and “mixed up,” Buffett said.
“It does really, really affect the system when people lose confidence in banks,” he said.
Buffett said nonetheless some banks have “mismanaged” their assets and liabilities, and banks’ board of directors should ensure there are consequences when top executives make mistakes that hurt shareholders.
Silicon Valley Bank collapsed on March 10 after losses on fixed-income investments left it short of capital, triggering a bank run.
Over the next nine days, Signature Bank failed, First Republic Corp received a $30 billion deposit infusion from other banks, and Credit Suisse Group AG agreed to be sold to rival UBS AG.
Buffett also said he would bet $1 million that no American depositor would lose money from a bank failure, with the person on the losing side of that bet donating the money to charity.
The Federal Deposit Insurance Corp insures deposits for up to at least $250,000 per depositor per FDIC-insured bank.
Buffett was speaking from Tokyo, where he was visiting five large Japanese trading houses in which Berkshire has investments.
Berkshire invests in several banks, including a stake in Bank of America Corp (NYSE:BAC) worth $34.2 billion at the end of 2022.
