Warren Buffett ‘in talks’ with senior White House officials about ‘investing in the banking sector’ after a string of major failures – as nearly 200 banks are at risk in the wake of the SVB crisis, a new study reveals
- Warren Buffett is in talks with Biden’s administration to discuss possible investments in US banks
- Buffett, who has intervened in financial turmoil in the past, is also said to offer “guidance” to White House officials
- It comes after a study found nearly 200 banks are facing the same kind of risks that brought Silicon Valley Bank to a halt
Billionaire Warren Buffett is in talks to invest in the US regional banking sector amid widespread industry panics not seen since the 2008 financial crisis.
Buffett, who has stepped in to help struggling banks in the past, has reportedly had “several meetings” with senior White House officials who have offered advice on the current turmoil.
It comes after it emerged that nearly 200 banks would fail if half their depositors suddenly withdrew all their funds following the sudden collapse of Silicon Valley Bank and First Signature Bank.
Anonymous sources told Bloomberg that talks between Buffett and President Biden’s administration focused on him potentially investing in the region’s banking sector.
But they add that he is also offering advice to officials on how to weather the storm, as officials fear the failures will have a domino effect on the banking system.
Warren Buffett pictured is in talks to invest in the US regional banking sector amid widespread industry panics
It’s not the first time that Buffett, who is currently CEO of conglomerate Berkshire Hathaway, has used his considerable wealth and expertise to help struggling banks.
In 2011, he injected capital into Bank of America after its stock plummeted on losses related to subprime mortgages.
And during the 2008 financial crisis, he gave Goldman Sachs Group Inc. a $5 billion lifeline.
Officials from the White House and Berkshire Hathaway have yet to comment.
Panic has shaken the banking sector in recent weeks after SVB was the largest bank to fail since 2008.
The crisis was triggered by rising interest rates, which caused the bank’s customers to suddenly withdraw their deposits to keep their businesses afloat.
It caused a $1.8 billion funding hole and prompted CEO Greg Becker to urge customers to “keep calm.”
As fears of a collapse mounted, scores of customers were lined up outside bank branches hoping to withdraw their money.
Biden’s government tried to ease the panic by promising to pay out uninsured deposits from failed banks in full.
Big US banks this week voluntarily injected $30 billion to stabilize First Republic Bank to avoid taxpayers footing the bill.
Panic has shaken the banking sector in recent weeks after SVB was the largest bank to fail since 2008
A notice hangs on the door of Silicon Valley Bank in San Francisco, California on March 10
But a new study by the Social Science Research Network found that around 186 banks face the same risks as the SVB.
Data shows that these banks would fail if even half of their depositors were quick to withdraw their funds.
“Our calculations suggest that without further government intervention or recapitalization, these banks are certainly at potential run risk,” the study said.
Economists examined banks’ asset books and found an estimated $2 trillion loss to their market value.