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Berkshire Hathaway CEO Warren Buffett said on Saturday that regulators had avoided financial disaster by ensuring that Silicon Valley Bank customers didn’t lose money in the company’s collapse.
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The sudden collapse of SVB in March forced the Federal Deposit Insurance Corporation to seize the bank, sell some of the bank’s assets to First Citizens. many weeks later.
The FDIC protected SVB customers in the process by calling systematic risk exception during the March turmoil, allowing the regulator to process all depositors, even if their accounts exceed the $250,000 insurance threshold.
“It would be a disaster” if regulators didn’t do that, Buffet said during his annual shareholder meeting.
Shareholders watch Warren Buffett and Charlie Munger from the spill room during the Berkshire Hathaway annual meeting on Saturday, May 6, 2023, in Omaha, Neb.
Rebecca H. Gratz | AP
“Letting uninsured depositors lose their money would ‘cause every bank in the country to flee,” he said.
So the move, which has been criticized because it protects venture capital investors, startups and other savvy players, is “inevitable” in Buffett’s view.
The protection of uninsured depositors contributed to the estimated $20 billion in losses the FDIC’s Deposit Insurance Fund received in receiving the SVB. The largest US banks are expected to cover economic costs through special fees.
This story is evolving. Please check back for updates.
