Warren Buffett said Saturday that it would have been "catastrophic" to let any Silicon Valley Bank depositors lose their money when regulators seized the troubled California lender.
The fall of Silicon Valley Bank on March 10 triggered panic across the financial system. In a bid to restore calm, US officials made the controversial decision to protect all depositors at the failed institution even if their accounts were above the $250,000 limit insured by the Federal Deposit Insurance Corporation.
It did the same for depositors at Signature Bank, citing the systemic risk posed by the sudden collapse of both institutions. Some observers have since called for the US government to raise the deposit insurance levels or provide systemwide protection of all deposits as a way of preventing any future bank runs.
"I can't imagine anybody saying I'd like to be the one [on] television tomorrow and explain [to] the American public why we're keeping only $250,000 insured and we're going to start a run on every bank in the country and disrupt the world's financial system," Buffett said Saturday at the Berkshire Hathaway annual meeting.
Not protecting all depositors, he said, "would have been catastrophic."
The comments were the first from Buffett on banks during a meeting where he is expected to discuss the ongoing turmoil in the regional banking world. The 92-year-old billionaire has over the decades played the role of rescuer to a number of financial institutions.
He has thus far this year said little on the current crisis beyond a recent interview with CNBC’s Becky Quick, where he did acknowledge reducing Berkshire's exposure to the industry amid concerns that banking could run into a lot of "trouble."
“I didn’t like the banking business as well as I did before,” he said during the April 12 interview. “I just think the system isn’t set up quite right in terms of connecting punishment to culprits,” he added. “It’s incredibly important that your banking system run well.”
Berkshire hasn't been able to completely escape the chaos of the first quarter. In fact, Berkshire disclosed Saturday that the value of its Bank of America (BAC) stake declined by $4.7 billion during the first three months of the year, to $29.5 billion.
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