Warren Buffett ‘in talks’ with senior White House officials about ‘investing in the banking sector’ after series of major failures, as nearly 200 banks are at risk after SVB crisis, new study reveals
- Warren Buffett is in talks with the Biden administration to discuss a possible investment in US banks.
- Buffett, who has a history of intervening during the financial crisis, is also said to offer “guidance” to White House officials.
- It comes after a study found that nearly 200 banks face the same kinds 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 a history of stepping in to help troubled banks, has reportedly had “multiple conversations” with senior White House officials offering guidance on the current turmoil.
It comes after it emerged that nearly 200 banks would fail if half of their depositors suddenly withdrew all their funds 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 have focused on the possibility of him investing in the regional 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 create a ripple effect in the banking system.
Warren Buffett, pictured, is in talks to invest in the US regional banking sector amid widespread industry panic.
It is not the first time that Buffett, who is currently chief executive of conglomerate Berkshire Hathaway, has used his considerable wealth and experience to help struggling banks.
In 2011, he injected capital into Bank of America after its shares plunged due to losses linked to subprime mortgages.
And during the 2008 financial crisis, it gave a $5 billion lifeline to Goldman Sachs Group Inc.
Representatives for the White House and Berkshire Hathaway have yet to comment.
Panic has rocked the banking sector in recent weeks after SVB became the biggest bank to collapse since 2008.
The crisis was triggered by rising interest rates that caused bank clients to suddenly withdraw their deposits to keep their businesses afloat.
It caused a $1.8 billion funding black hole, prompting CEO Greg Becker to urge clients to “keep calm.”
As fears of its collapse began to rise, scores of customers were photographed lining up outside its bank branches hoping to withdraw their funds.
The Biden administration tried to ease the panic by promising to pay off uninsured deposits from failing banks in full.
Big American banks voluntarily deposited $30 billion to stabilize First Republic Bank this week to keep taxpayers from footing the bill.
Panic has rocked the banking sector in recent weeks after SVB became the biggest bank to collapse since 2008.
A notice hangs on the door of Silicon Valley Bank in San Francisco, California, on March 10.
But a new study from the Social Science Research Network found that some 186 banks are subject to the same risks as SVB.
The data shows that these banks would fail if only half of their depositors quickly withdrew their funds.
“Our calculations suggest that these banks are indeed at potential panic risk, absent further government intervention or recapitalization,” the study states.
Economists studied the banks’ asset books and found an estimated $2 trillion loss in their market value.
