Executives who led US banks into crisis should face ‘punishment’: Warren Buffett

The incentives in bank regulation are so messed up and so many people have an interest in having them messed up … it’s totally crazy, says Buffet

PGurus Newsdesk

May 8, 2023

The incentives in bank regulation are so messed up and so many people have an interest in having them messed up … it’s totally crazy, says Buffet

Warren Buffett slams US Govt handling of bank failures

As the American economy grapples with the worst series of bank failures since the 2008 financial crash, billionaire investor Warren Buffett has said executives who led the US banking system into crisis should face “punishment”, a media report said.

The comments made by Buffett, 92, who is known to investors as the “Oracle of Omaha”, come a week after the collapse of First Republic Bank, the biggest US bank to fail since the 2008 financial crisis, The Guardian reported.

The owner of the investment firm Berkshire Hathaway said US bank directors “should suffer” when they run into trouble, adding that he was wary of most banking stocks because of “the messed-up incentives”, The Guardian reported.

Speaking at Berkshire’s annual shareholder meeting, Buffett criticized how politicians, regulators, and the press had handled the recent failures of Silicon Valley Bank, Signature Bank, and First Republic Bank, saying their “very poor” messaging has unnecessarily frightened depositors.

He said “The CEO and directors should suffer” when the banks they run get into trouble. Otherwise, it “teaches the lesson that if you run a bank and screw it up, you’re still a rich guy, the world still goes on … That is not a good lesson to teach the people who are holding the economy’s behavior in their hands”, The Guardian reported.

Buffett said he was still cautious about holding bank stocks and had recently reduced his exposure to the sector – with the exception of Bank of America, which he liked.

He said: “The incentives in bank regulation are so messed up and so many people are interested in having them messed up … it’s totally crazy.”

[With Inputs from IANS]

PGurus is now on Telegram. Click here to join our channel and stay updated with all the latest news and views

For all the latest updates, download PGurus App.