Warren Buffett Warns US on Bank Crisis, Use of Bitcoin

Warren Buffett believes that there could be additional bank failures in the US
He said depositors would not be affected
The Berkshire Hathaway CEO reiterates his stance on Bitcoin and cryptocurrency

Warren Buffett, the billionaire chairman of Berkshire Hathaway, has stated that more banks will "go bankrupt," but depositors in US banks need not be concerned.

Buffett noted that the current banking turmoil does not resemble the conditions that precipitated the global financial crisis of 2008 in any way.

Warren Buffett on US Bank Crisis

Buffett stated that when discussing inflation and the state of the United States, "extreme inflation is always a possibility." He added that inflation and recession "can cause a lot of trouble, and recessions can turn into depressions," he added. It is much simpler to destabilize an economy than to piece it back together again.

Regarding Bitcoin, which is experiencing a resurgence as its price surges above $30,000, Buffett stated that his opinion of the cryptocurrency had stayed the same. He compared purchasing Bitcoin to wagering once more. In the interim, Bitcoin has experienced a recovery, with prices currently at $30,460.39, an increase of 8% over the past week, KITCO reported.

Silicon Valley Bank and Signature Bank, the second-and third-largest bank failures in US history, respectively, failed last month, prompting extraordinary rescue action by regulators, who guaranteed all deposits in the failed lenders and provided an additional funding facility for troubled banks.

The "Oracle of Omaha" stated that some of the "dumb" things that banks do intermittently, such as mismatched assets and liabilities and dubious accounting, were exposed during this period.

According to CNBC, Buffett stated that some financiers would continue to act this way, putting certain equities' shareholders at risk. However, the 92-year-old investor stated that dread and hysteria about depositors losing their money were unwarranted, as the system is designed to safeguard the nation's deposits.

US Banking Industry

He emphasized that it is crucial for institutions to maintain public confidence and that they can lose it in seconds, as evidenced by the recent scandal.

In the past, Buffett has been a white knight for troubled banks. After Lehman Brothers' 2008 bankruptcy, he famously rescued Goldman Sachs with a $5 billion liquidity injection. Buffett injected $5 billion into the then-struggling Bank of America in 2011 as a significant vote of confidence.

Buffett affirmed that his firm sold some bank stocks after he detected red flags in their quarterly earnings reports, but he declined to name specific institutions. Per Fox Business, he maintained his holdings in Bank of America and favored CEO Brian Moynihan "enormously."

Following the failure of Silicon Valley Bank, the share trading of several other institutions was halted. The failure of Silicon Valley Bank and Signature Bridge Bank prompted widespread concern about the likelihood of a repeat of the 2008 financial crisis that followed the bankruptcy of Lehman Brothers.

However, Treasury Secretary Janet Yellen stated last month that the current financial crisis is different from 2008. During his appearance on Squawk Box, Buffett was also asked what advice he would give Federal Reserve Chair Jay Powell if he were to raise interest rates. Buffett stated, "I would say he should do what he thinks is in the best interest of the United States."