MFOHome About Commentary Discussions Funds The Best Resources Support Us!

Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

Sign In Register

Categories

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

Warren Buffett talking to Biden administration on banking crisis

Sven
in Other Investing
Excerpt:
The conversations come as Buffett has been a savior to the banking sector in the past. The chairman of Berkshire Hathaway (NYSE:BRK.B) invested $5 billion in Bank of America (BAC) in 2011 as he tried to bolster the bank due to its losses tied to subprime mortgages. In 2008, Buffett came to the aid of Goldman Sachs (GS), investing $5 billion in the bank in the depths of the financial crisis.

Regional banks may need the help of Buffett after several of the banks' stocks cratered this week, such as Western Alliance Bancorp (WAL), KeyCorp (KEY) Comerica (CMA) and Zions Bancorp (ZION), after the twin failures of Silicon Valley Bank and Signature Bank.
https://seekingalpha.com/news/3948701-warren-buffett-talking-to-biden-administration-on-banking-crisis-report

The original article is in Bloomberg but it is behind a paywall.

No detail release yet. In BOA case, WB got their preferred stocks at his asking price and dividend yield. Both were aimed at lowering his investment risk knowing that there is a high probability the government will come to help. FED did shortly. Read somewhere he made many folds over his initial investment with little risk. We will see what Buffet will ask for this time. Despite his age, he is a great investor.

Comments

  • yogibearbullyogibearbull
    Twitter has been speculating big news ahead of US futures opening this evening - in about 10 min.

    So, we got BIG news from Europe on UBS taking over CS.

    NO big news in the US except rumors (including Buffett). We only have 2 releases TODAY by the Fed, one stating that US financial system is strong (after the UBS + CS news), another providing more dollar swap lines to other central banks.

    https://www.federalreserve.gov/newsevents/pressreleases/other20230319a.htm
    https://www.federalreserve.gov/newsevents/pressreleases/monetary20230319a.htm
  • rforno
    edited March 2023
    Futures opened modestly higher, but will it last? I wouldn't try to trade it....
  • Sven
    edited March 2023
    Futures on gold is rising while treasuries are falling. Oil and commodities recovered a bit. US stocks are up a bit. Europe is down. Japan is up. Think I will wait and watch.
    https://finviz.com/futures.ashx

  • hank
    edited March 2023
    Yes. Young Biden could benefit by some advice from an elder. If things really worsen, the more experienced Munger may join in.

    Thanks @Sven for the nice market summary.
  • johnNjohnN
    edited March 2023
    All central banks (EU Australian Canadian Japan USA) open up piggies accts again... Just like that the last 16 months of inflation war cries ceasing... Large monies maybe free flowing soon again.... Get ready

    Uncle power likely halt or raise very small perhaps last time to 0.25% on TUES.

    Economy get slaughtered if rates remain above 5.25%for an extended period of time.
  • Sven
    I am sure Powell is aware of something is broken within the banking system due to the unprecedented rate hike’s magnitude and pace. Clearly, something needs to be redone on the stress test that failed to catch these banks. Senator Elizabeth Warren blamed that on 2018 deregulation on part of Dobb-Frank Act and the Fed.
  • WABACWABAC
    Not much of an economy if 5.25% is enough to slaughter it.
  • Sven
    Morningstar’s take on Buffet potential help with the regional banks.
    Any Berkshire Action Would Like Be Capital Injection, Not Acquisition
    With all of that in mind, we would expect any action on the part of Berkshire-Buffett in the near term, with regards to the U.S. regional banks, to involve the same kind of capital injection (and Buffett seal of approval). This would be in exchange for high-coupon preferred stock (which is more tax efficient for an insurer) and warrants to buy common stock if anything happens at all. As such, that lifeline will not come cheap for those interested in going that route.

    What we do not expect to see is Berkshire stepping in and buying a bank. The firm has shown no interest in holding more than a 10%-15% stake in a U.S. bank primarily because ownership above that threshold comes with reporting requirements and oversight from the regulators that Berkshire is not all that interested in adhering to.
    https://morningstar.com/articles/1144873/another-banking-crisis-another-call-to-buffett
Sign In or Register to comment.