Buffett said he is willing to bet that no depositor will lose money next year. Still, the billionaire investor found that shares in troubled banks are not value investments because shareholders are likely to lose even if the government takes steps to protect depositors.
“They’re not going to save shareholders,” Buffett said after being asked if battered shares of regional banks, including First Republic Bank, would be a “bargain.”
Buffett said the structure of the Federal Deposit Insurance Corporation (FDIC), which collects the valuations of banks with the deposits it insures, means the federal government won’t lose money while it sorts out the deposits. bankrupt banks.
“People are under the impression that the FDIC is the US government,” Buffett said. “But the cost of the FDIC, including the cost of their employees and everything, is borne by the banks. So the banks have never cost the federal government a penny.”
The sales of Berkshire’s bank shares are not critical of the management of those banks, Buffett said, but rather speak to their cooling sentiment in the sector in general.
Buffett noted that Bank of America Corp is a bank he still favors.
“I really like Brian Moynihan,” Buffett said of the bank’s CEO. “I just don’t want to put a sell tag on his stock.”