Warren Buffett, chairman of Berkshire Hathaway and known as the "Oracle of Investment," recently warned about the collapse of Silicon Valley Bank (SVB), stating that "the bank failures are not over yet." He predicted that additional bank failures could follow. However, he added that due to protective measures by authorities, depositors will not lose their deposits.
While visiting Japan, Buffett appeared on CNBC's Squawk Box on the 12th (local time) and said, "Banks may fail, but depositors will not suffer losses."
Buffett pointed out that during the 2008 global financial crisis, some banks mismanaged their assets and liabilities, calling the current situation "one of the foolish things banks periodically do" and a "stupid decision." He criticized, "Bankers want to keep doing this forever. They face repeated temptations," adding that "these actions will put shareholders at risk."
He also emphasized the importance of banks maintaining market trust, warning that such trust can collapse in an instant, as seen in this case. Buffett acknowledged concerns related to commercial real estate (CRE) raised after the SVB collapse and said some banks might have to bear losses. However, he predicted that this exposure would not lead to a broader threat.
While warning that more banks could fail in the future, Buffett cautioned against unnecessary fear and panic. He said, "There is no need to turn the foolish decisions of managers into fear for all American citizens," and added, "There is no need to panic. No one will lose money deposited in American banks. That will not happen." He even said he would willingly bet $1 million on this.
In the past, Buffett has acted as a white knight during banking crises. Right after Lehman Brothers' bankruptcy in 2008, he invested $5 billion to support Goldman Sachs.
He also mentioned his successor, Vice Chairman Greg Abel. Abel has been increasing his public presence as Buffett’s successor, appearing on stage with Buffett at Berkshire’s shareholder meetings from 2020 to 2022 and accompanying him on this visit to Japan. Buffett referred to Berkshire Hathaway’s subsidiaries, saying, "Greg is there. He understands all our businesses," and praised him as "a great advancement for me."
Regarding questions about the Federal Reserve's monetary policy, Buffett responded, "Who knows?" and said, "I don’t know exactly what they should do. They followed conventional wisdom."
During his visit to Japan, Buffett previously told the Nihon Keizai Shimbun that he is considering additional investments in Japanese stocks. It was also confirmed that he has increased his stakes in the five major Japanese trading companies to 7.4% each. In an interview with the Asahi Shimbun released the day before, when asked if he was interested in investing in artificial intelligence (AI) technologies like ChatGPT, he replied, "I don’t feel that way. It might be good as a citizen, but it’s different as an investor."
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