Warren Buffett says letting Silicon Valley Bank customers go under would’ve been ‘catastrophic’

FAN Editor

Warren Buffett on banking fallout: Crisis would have been 'catastrophic' without government backstop

Follow our live coverage of Warren Buffett at Berkshire Hathaway meeting.

Berkshire Hathaway CEO Warren Buffett said Saturday that regulators avoided a financial disaster by making sure that Silicon Valley Bank customers didn’t lose money in the firm’s collapse.

The sudden downfall of SVB in March forced the Federal Deposit Insurance Corp. to seize the bank, selling some of its assets to First Citizens weeks later.

The FDIC protected SVB customers in the process by invoking the systemic risk exception during the March tumult, allowing the regulator to make all depositors whole, even if their accounts exceeded the $250,000 coverage threshold.

“It would’ve been catastrophic” if regulators hadn’t done that, Buffet said during his annual shareholder meeting.

Shareholders watch Warren Buffett and Charlie Munger from the overflow room during the Berkshire Hathaway annual meeting on Saturday, May 6, 2023, in Omaha, Neb.

Rebecca H. Gratz | AP

Allowing uninsured depositors to lose money would’ve “started a run on every bank in the country,” he said.

So the move, which brought criticism because it protected venture capital investors, startups and other sophisticated players, was “inevitable” in Buffett’s view.

Protecting uninsured depositors contributed to the estimated $20 billion hit that the FDIC’s Deposit Insurance Fund took in the SVB receivership. The biggest U.S. banks are expected to cover the economic cost of that through special fees.

This story is developing. Please check back for updates.

Free America Network Articles

Leave a Reply

Next Post

Warren Buffett says it was 'inevitable' that the government would fully cover Silicon Valley Bank depositors

There was never any doubt that the U.S. government would fully cover Silicon Valley Bank deposits, because to do otherwise would have been “catastrophic,” Warren Buffett said. “That’s why they were covered,” the celebrated investor told audience members at Berkshire Hathaway’s annual shareholder meeting in Omaha, Nebraska on Saturday.  Back […]

You May Like