Warren Buffett ‘in talks’ with senior White House officials about ‘investing in the banking sector’ after series of major failures – as nearly 200 banks at risk following SVB crisis, new research reveals
- Warren Buffett is in talks with the Biden administration to discuss possible investments in US banks
- Buffett, who has a history of intervening during financial turmoil, would also offer “guidance” to White House officials
- It comes after a study found that nearly 200 banks are facing the same kind of risks that brought down Silicon Valley Bank
Billionaire Warren Buffett is in talks to invest in the US regional banking sector amid widespread industry panic not seen since the 2008 financial crisis.
Buffet, who has stepped in to help troubled banks in the past, has reportedly had “multiple conversations” with senior White House officials to offer advice on the current turmoil.
It comes after it emerged that nearly 200 banks would go bankrupt if half of their depositors suddenly withdrew all of their money following the sudden collapse of Silicon Valley Bank and First Signature bank.
Anonymous sources told Bloomberg that calls between Buffett and President Biden’s administration focused on his possible investments in the regional banking sector.
But they add that he also offers advice to officials on how to weather the storm, as officials fear the failures will create a domino effect through the banking system.
Warren Buffett, pictured, is in talks to invest in the US regional banking sector amid widespread industry panic
It’s not the first time Buffett, the current CEO of the Berkshire Hathaway conglomerate, has used his considerable wealth and expertise to help ailing banks.
In 2011, he injected capital into Bank of America after its stock plummeted due to losses on subprime mortgages.
And during the 2008 financial crisis, he gave a $5 billion lifeline to Goldman Sachs Group Incl.
Representatives from the White House and Berkshire Hathaway have yet to respond.
Panic has rocked the banking sector in recent weeks after SVB became the largest bank to fail since 2008.
The crisis was fueled by rising interest rates, causing the bank’s customers to suddenly withdraw their deposits to prop up their businesses.
It sparked a $1.8 billion funding blackhole, prompting CEO Greg Becker to urge customers to “keep calm.”
As fears of the collapse surfaced, heaps of customers were depicted queuing outside bank branches hoping to withdraw their money.
The Biden administration tried to ease the panic by promising to pay out uninsured deposits from failing banks in full.
Major U.S. banks this week volunteered $30 billion to stabilize First Republic Bank to prevent taxpayers from picking up the bill.
Panic has rocked the banking sector in recent weeks after SVB became the largest bank to fail since 2008
On March 10, a notice is posted at the door of Silicon Valley Bank in San Francisco, California
But a new study from the Social Science Research Network found that some 186 banks face the same risks as the SVB.
The data shows that those banks would fail if only half of their depositors withdraw their money quickly.
Our calculations suggest that these banks are certainly at potential risk of a run, without further government action or recapitalization.
Economists examined the banks’ asset books and found an estimated loss of $2 trillion in their market value.