Warren Buffett says the recent turmoil in the U.S. banking industry brought on by the failure of Silicon Valley Bank and other institutions caused unnecessary panic among depositors, whom he says are protected thanks to the Federal Deposit Insurance Corporation.
But the impact on investors could be a different story.
"We’re not over bank failures, but depositors haven’t had a crisis," the Berkshire Hathaway chairman and CEO told CNBC on Wednesday. "Banks go bust. But depositors aren’t going to be hurt."
"Nobody is going to lose money on a deposit in a U.S. bank. It’s not going to happen," the billionaire investor said. "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."
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SVB collapsed last month after entering a liquidity crisis that critics blamed on poor asset management, triggering a full-fledged run on the bank.
SVB was unique in that it catered largely to the venture capital community and had a high percentage of deposits that were uninsured by the FDIC, so federal regulators swooped in with a plan guaranteeing that all depositors would be made whole.
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But the failure of SVB and a handful of other institutions in recent weeks sparked fears of contagion amid concerns that more banks will collapse for making the same mistakes.
Buffett, known as "The Oracle of Omaha," confirmed his company sold several bank stocks after he spotted red flags in their earnings reports, but did not want to name names. He went on to acknowledge that he kept his holdings in Bank of America, saying he likes CEO Brian Moynihan "enormously."
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"But I did sell banks that we owned for 25 or 30 years," Buffett acknowledged. "I just don't think the system's quite right in terms of connecting punishment to culprits."
