Warren Buffett, the investment tycoon and CEO of Berkshire Hathaway, has criticized the US government for its handling of the regional banking crisis, stating that the messaging has been “poor” and that it has caused a lack of confidence among consumers. Four regional banks have been caught up in the crisis since the beginning of March, with three of them subsequently taken over by other institutions with the help of authorities.
The Federal Deposit Insurance Corporation (FDIC) took the controversial decision to support the uninsured deposits of two of the banks, Silicon Valley Bank (SVB) and Signature Bank, by insuring all deposits, including those above the legal limit of $250,000. Despite this extraordinary step, consumers are still worried, according to Buffett.
Buffett criticized the messaging of politicians, agencies, and the press, stating that it has been poor and has caused confusion among the public. He cited the recent government takeover of SVB, which included an expanded deposit guarantee, as an example of the government’s poor handling of the crisis.
While the emergency takeover of regional bank First Republic by JPMorgan Chase on Monday seemed likely to ease anxiety about the banks, the week has been turbulent. Several mid-sized banks were targeted on Wall Street, with PacWest falling 68% before recovering 82% in Friday’s session alone.
On Saturday, Berkshire Hathaway reported a profit of $35.5 billion for the first quarter of 2023, largely due to strong financial markets. In the first three months of the year, the group sold $13.2 billion worth of equities from its investment portfolio, while only buying $2.8 billion, drastically reducing its exposure to stocks.
Buffett, who is 92 years old, transformed Berkshire Hathaway from a small textile company into a conglomerate now valued at over $700 billion.
