Warren Buffett, the famous American business magnate and philanthropist, has some dire predictions for the future of the banking system. Recently, some major banks in the US have collapsed, such as the Silicon Valley Bank. Unfortunately, other banks might follow that path as well if Warren Buffett’s predictions turn out to be true.
Kitco News reveals the dire predictions of the famous businessman, but he also brings some good news. Warren Buffett stated recently for CNBC:
People shouldn’t be worried about losing their money and their deposits they have in an American bank, but the message has gotten very confused,
The costs of the [Federal Deposit Insurance Corp.] are borne by the banks. Banks have never cost the federal government a dime … Nobody is going to lose money on a deposit in a U.S. bank.
Interestingly enough, Buffett also compared the current situation with the one from the financial crisis that took place all over the world back in 2008. In his view, the current banking turmoil does NOT resemble the same environment that led to the global crisis from 15 years ago.
Buffett explained as Kitco News quotes:
You don’t need to turn a dumb decision by managers into panicking the whole citizenry of the United States about something they don’t need to be panicked about,
They haven’t made the same sort of mistakes that they made back in 2008 or ’09, but they have mismanaged assets and liabilities and bankers have been tempted to do that forever, and then it bites them in a big way.
The global crisis from 2008 began in the US and spread to many other countries of the planet. It began when a sharp drop in housing prices in the US caused, more or less directly, widespread defaults on mortgages and securities backed by them.
In other words, adding money in a deposit in a bank from the US remains a good idea. Hopefully, the situation won’t get worse for the Americans.