Billionaire Buffett called for the heads of bankrupt banks to be held accountable

One of the world’s largest investors, Warren Buffett, said that if the US authorities had not decided to insure all deposits of Silicon Valley Bank, which went bankrupt in March, a financial catastrophe could have occurred. He also noted that, in his opinion, the management of the bankrupt bank should be punished. He announced this at the annual meeting of shareholders of Berkshire Hathaway.

As Mr. Buffett explained, the loss of deposits by Silicon Valley Bank depositors would lead to a massive outflow of deposits from all US banks. He also added that problems in the US banking sector may continue. At the same time, in his opinion, bank depositors should not worry about this.

Warren Buffett said that conclusions should be drawn from the situation with Silicon Valley Bank. “There should be punishment for people who do wrong,” he said (quoted from RBC).

He also talked about the collapse of the First Republic Bank the day before. The bank issued large uninsured mortgages at fixed low rates, which were reported. “He did it in front of everyone, and the world didn’t pay attention to it until he burst,” Buffett said (quoted from Bloomberg).

During the meeting, Berkshire Hathaway said its operating income rose 13% to $8.07 billion in the first quarter of 2023, thanks to the insurance companies in Berkshire Hathaway’s portfolio returning to profitability after six quarters of losses.

At the same time, according to analysts, by the end of 2023, the profit of most Berkshire Hathaway companies will fall, Mr. Buffett said. In their opinion, this will happen due to inflation and rising rates. Despite this, according to Mr. Buffett, in 2023, income from insurance operations should grow, as they are less related to business activity. Geico’s profit was $703 million, Berkshire said, as higher average premiums and lower ad spend contributed to this, despite a reduction in insurance claims.

Since March, three regional banks have closed in the US. In March, the Federal Deposit Insurance Corporation (FDIC) closed Signature Bank, and Silicon Valley Bank went bankrupt the same week. Early May FDIC closed See also First Republic Bank. By data The Financial Times, an Arizona-based Western Alliance bank, is considering a sale.

On the situation in the US economy – in the publication “Kommersant” “The Fed touched the ceiling”.

Olesya Pavlenko