Billionaire investor Warren Buffett said on Thursday that more U.S. bank failures are likely, but depositors can rest assured they won’t lose their money.
“Bank failures aren’t over,” Buffett, who heads investment and insurance firm Berkshire Hathaway, said in an interview with CNBC, adding that the “silly decisions” of bank management “displaced all Americans from unnecessary costs.” We shouldn’t panic,” he said.
Buffett said he could bet depositors wouldn’t lose their money over the next year. But even if the government protects their deposits, shareholders are likely to lose everything, he said, noting that investing in troubled bank stocks is not a value investment.
Asked whether stocks of regional banks such as First Republic Bank were “bargains,” he said: “The authorities are not going to bail out shareholders.”
The Federal Deposit Insurance Corporation (FDIC) collects contributions from banks that insure deposits, so the federal government won’t use money to liquidate failed banks, he said. “People have the impression that the FDIC is the U.S. government, but the FDIC’s costs, including personnel costs, are all covered by the banks. No,’ he said.
Buffett also said that the sale of Berkshire’s bank stake was not a criticism of the target bank’s management. Rather, he said, it’s an indication of his own waning sentiment for the industry as a whole.
However, Bank of America (“I love Brian Moynihan.
Original title:Buffett Says More Bank Failures Are Likely But Depositors Safe(excerpt)