Washington is getting desperate to contain the unfolding banking crisis, and is now looking for new ways to kick the can down the road for a little while longer.
Sources familiar with the matter told Bloomberg on Sunday that the Biden administration was in talks with Warren Buffett over the past week, in an effort to gain advice from the successful billionaire investor regarding the worsening volatility across the US banking sector. After realizing that markets just aren’t buying regulators’ bologna sandwich of extraordinary measures of assurance that uninsured deposits will be fully covered by Wall Street, Washington is now orchestrating a potential investment from Buffett into the banking sector.
Buffett, whose Berkshire Hathaway (NYSE: BRK) conglomerate of successful companies amassed him a fortune of around $101.6 billion, has previously stepped in to save the banking industry. He invested $5 billion into Goldman Sachs after the 2008 financial crisis, and provided a major capital injection into Bank of America in 2011 after the bank suffered major losses from subprime mortgages.
Government officials are turning to the billionaire after three US regional lending institutions collapsed earlier this month following extensive deposit outflows, including Silicon Valley Bank, Silvergate and Signature Bank. The bank runs were provoked after customers became concerned over the financial wellbeing of banks in light of the Fed’s interest rate increases.
READ: Silicon Valley Bank Depositors To Be Made Whole While Signature Bank Also Shuttered
The situation rattled the entire US banking sector, sending stocks of numerous other banks plummeting despite repeated assurances from the government and regulators. According to a recent report published by the Social Science Research Network, nearly 200 other US banks face similar circumstances that led to the collapses.
Information for this briefing was found via Bloomberg and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
