The billionaire investor has accused First Republic of making “crazy” propositions to clients
Warren Buffett. © Dimitrios Kambouris/Getty Images
Billionaire investor and philanthropist Warren Buffett slammed executives in charge of failed US lenders, saying they should be held accountable for the mismanagement that resulted in their collapse, Bloomberg reported on Saturday.
Speaking at an annual meeting of Berkshire Hathaway shareholders in Omaha, Nebraska, Buffet said First Republic was offering “crazy” non-government-backed mortgages at fixed rates, and in some cases for ten years.
Buffet’s longtime business partner, Charlie Munger, previously said that US banks are full of bad commercial property loans, and warned of a brewing storm in America’s real estate market.
Last week, First Republic was seized by US financial regulators and acquired by JPMorgan, the country’s biggest bank. The San Francisco-based lender, which was ranked 14th in size among US commercial banks, had previously received a $30-billion rescue shot from a group of Wall Street banks in the form of deposits.
The sale of First Republic Bank, which had around $229 billion in total assets and $104 billion in total deposits, followed massive deposit runs in March, which caused two regional lenders, Silicon Valley Bank and Signature Bank, to fail within days.
READ MORE: Washington seeks banking crisis advice from Warren Buffet – Bloomberg
Earlier this week, shares of Los Angeles-based PacWest and Arizona’s Western Alliance were suspended after their prices fell dramatically. Earlier in the week, shares of several regional US lenders plunged by at least 15%, triggering investor concerns about the financial health of other mid-sized banks.
In March, major media outlets reported, citing sources, that Buffett had been in contact with senior officials in the Biden administration to find ways to resolve the unfolding banking crisis.
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