Warren Buffett in touch with Biden officials on banking crisis

(Bloomberg) — Berkshire Hathaway Inc.’s Warren Buffett has been in touch with senior officials in President Joe Biden’s administration in recent days as the regional banking crisis unfolds.

Most read from Bloomberg

The courtship between Buffett and the administration was described by people familiar with the matter, who asked not to be identified discussing private information. It was not immediately clear what role, if any, the billionaire investor might play in containing the crisis following the failures of Silicon Valley Bank, Signature Bank and Silvergate Capital Corp.

Buffett has a long history of stepping in to help banks in trouble, leveraging his cult investment status and financial power to restore confidence in ailing firms. Bank of America Corp. won a capital injection from Buffett in 201[ads1]1 after its stock plunged amid losses linked to subprime loans. Buffett also threw a $5 billion lifeline to Goldman Sachs Group Inc. in 2008 to shore up the bank after Lehman Brothers Holdings Inc.’s collapse.

Representatives for Berkshire Hathaway and the White House did not immediately respond to requests for comment. Officials at the US Treasury Department declined to comment.

US regulators unveiled extraordinary measures to reassure customers last weekend, promising to fully pay out uninsured deposits in the failed banks. Shares in regional banks continued to fall this week on fears that the pain would spread.

Biden’s team, wary of political backlash, has moved to orchestrate backstops that do not require direct government spending from taxpayers, including actions by the Federal Reserve. Major U.S. banks voluntarily put in $30 billion to stabilize First Republic Bank this week, a move regulators described as “very welcome.” Any investment or intervention by Buffett or other figures will continue that playbook, trying to stop the crisis without direct bailouts.

–With assistance from Max Reyes and Katherine Doherty.

Most read from Bloomberg Businessweek

©2023 Bloomberg LP

Source link

Back to top button