Buffett says US bank deposits are safe and the government would backstop all of them if necessary

https://www.cnbc.com/2023/04/12/warren-buffett-us-bank-deposits-are-safe.html

Warren Buffett said Americans should not be concerned about their bank deposits in the wake of the latest financial shock in the sector and the government would ensure no depositor in this country lost a dime. “People shouldn’t be worried about losing the money and the deposits they have in an American bank, and today, they have no reason to worry,” said the Berkshire Hathaway chairman and CEO in an interview with Becky Quick from Tokyo on CNBC’s “Squawk Box” Wednesday. “But the message has gotten very confused and people don’t really understand how it all works.” The banking sector went through a brief panic in March as depositors fled Silicon Valley Bank, which had mismanaged its bond portfolio and was overly leveraged to the tech industry. Fear grew that depositors with more than the $250,000 FDIC insurance limit would lose their money. But over the weekend on March 12, the government backstopped all depositors in SVB, along with those in Signature Bank, no matter the amount they had with the banks.

Buffett said the government would likely step in to backstop all depositors in all U.S. banks if that was ever necessary, though he did note that would require Congressional approval. “We’ll get the OK,” he said when asked if Congress would approve that extraordinary action. Buffett noted that Congress would also adjust the debt ceiling for this to take place in order to avoid financial ruin for the country. Buffett noted that shareholders may lose out if more bank failures occur and rightly so, but depositors shouldn’t be worried. Bank closures are an issue that’s impacted Buffett personally, he said, with his dad losing his job and savings in the 1930s when the bank he worked at failed.

Buffett, 92, said he so confident that U.S. depositors are safe that he would put a million dollars of his own money in a bank and challenged someone else to do the same. He said he will give that money to charity at the end of the year if just one American lost their deposits through a bank closure, but he keeps the other person’s money if U.S. depositors remain whole. “If any American depositor has lost money from a bank failure, the other soul gets to name where the $2 million goes, to what charity,” he said. “If they haven’t, I get the payment. And that’s a firm offer, and we’ll see who steps up.”