Billionaire Warren Buffett reportedly advises Biden administration on U.S. regional banking sector

Buffett’s advice

Billionaire Warren Buffett, one of the greatest investors of all time, reportedly spoke to President Joe Biden over the weekend, giving advice on the tumultuous situation the banking sector is currently navigating.

Nebraska-based Buffett, nicknamed the Oracle of Omaha due to his successful investment decisions, had multiple conversations with senior officials in the Biden administration in the past few days, Bloomberg reported. According to the news outlet, calls between the legendary investor and Biden’s team focused on Buffett potentially investing in the U.S. regional banking sector. The 92-year-old chair and CEO of Berkshire Hathaway also had advice on how to navigate the unfolding banking crisis.

Buffett’s track record

It wouldn’t be the first time that Buffett had intervened to calm the banking sector in turmoil. Back in 2008, at the height of the financial crisis, the guru investor bought $5 billion of preferred stocks in Goldman Sachs Group Inc., tossing the bank a crucial lifeline at a time when many institutions were struggling to strengthen their liquidity.

In 2011, during the U.S. debt-ceiling crisis, Buffett gave a capital infusion of $5 billion to Bank of America Corp. The move shored up confidence in one of the biggest U.S. banks at a time of turmoil, while also turning out to be an extremely lucrative investment for Buffett.

Reports of Buffett’s involvement in current crisis

News of Buffett’s involvement in talks about the current banking sector crisis, started by the collapse of Silicon Valley Bank, have been reported by several news media, which have written about heads of regional banks traveling to Omaha, Nebraska, over the weekend.

“A large number (>20) of Private Jets landed in Omaha yesterday afternoon. Jets flew from HQs of Regional Banks, Ski Resorts & DC. Did Buffett just fly all the regional bank CEOs into Omaha & offer a deal to SAVE the banks?” tweeted market researchers Fuzzy Panda.

“During the 2008 crisis, Buffett served as a backstop for both Bank of America and Goldman Sachs. He has a billion shares of Bank of America, and positions in some other bank equities. This time it’s regional banks that are looking for assistance,” tweeted investment strategist Lyn Alden.

Current situation and emergency measures

Last weekend, the federal government tried to contain the damage of SVB’s meltdown and contagion to the wider banking sector by assuring all SVB customers that their deposits will be fully paid out, whether they were insured or not. But this and other emergency measures, including the shutting down of New York-based Signature Bank, failed to appease investors, with shares in regional banks continuing to fall this week.

No comment from White House or Buffett

Newsweek emailed the White House’s media team for comment but did not immediately receive a response. Buffett could not be reached for comment.

Credit: https://www.newsweek.com/warren-buffett-ready-save-us-economy-once-more-1788953

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