For businessman Warren Buffett, the US authorities mishandled their communication around the banking crisis, which explains why confidence among US consumers has not returned. Four banks have been automatically closed since the beginning of March in the United States, and three of them were later taken over by another establishment with the help of the authorities. In the case of Silicon Valley Bank (SVB) and Signature Bank, the Deposit Guarantee Agency, the FDIC, insured all deposits placed in these two establishments, beyond the legal limit theoretically set at $250,000 per customer.
“We see the FDIC guaranteeing all deposits … and there are always people who are very concerned,” Warren Buffett said Saturday during the general meeting of his conglomerate, Berkshire Hathaway. “Communication has been bad,” according to the billionaire who continues to lead his group, at 92 years old. “It was mediocre among politicians, who sometimes have an interest in it. It was bad among” government agencies in charge of banking supervision, including the FDIC. “And she’s been just as mediocre in the media.”
Earnings of more than $35 billion in the first quarter for Berkshire Hathaway
While the emergency takeover of regional outlet First Republic by giant JPMorgan Chase on Monday seemed to ease anxiety around banks, the week was eventful. Several midsize banks were targeted by Wall Street, notably California’s PacWest, which fell 68%, before recovering 82% in Friday’s session alone.
On Saturday, Berkshire Hathaway reported a monstrous $35.5 billion profit in the first quarter alone, largely attributable to strong financial markets. During the first three months of 2023, the group sold $13.2 billion worth of shares, but only bought $2.8 billion, thus drastically reducing its exposure. Warren Buffett managed to transform Berkshire Hathaway, a textile SME acquired in the mid-1960s, into a gigantic conglomerate, today valued at more than 700 billion dollars.
Source: BFM TV
