Ahead of the Fed meeting, Warren Buffett talks to Biden officials about the banking crisis
US business magnate Warren Buffett is in touch with senior officials in Joe Biden’s administration as the banking crisis unfolds in the country.
The contact between Buffett and the Biden administration was reported by the Bloomberg news agency.
The CEO of Berkshire Hathaway Inc could play to contain the crisis after the failures of Silicon Valley Bank, Signature Bank and Silvergate Capital Corp.
Warren Buffett has a long history of intervening to help banks in crisis, using his cult investment status and financial weight to restore confidence in the crumbling banking system.
Bank of America Corp. for example, won a capital injection from Buffett in 2011 after his stock plummeted due to losses on subprime mortgages. Buffett also threw a $5 billion lifebuoy to Goldman Sachs Group Inc during the 2008 financial crisis to prop up the bank after the collapse of Lehman Brothers Holdings Inc.
Recently, US regulators unveiled extraordinary measures to reassure customers following the collapse of Silicon Valley Bank and Signature Bank this month, promising to pay out uninsured deposits in the failed banks in full.
The Federal Reserve also made it easier for banks to borrow from it in emergencies.
While the measures provided some relief for Silicon Valley businesses and global markets on Monday, concerns about broader banking risks remain and have raised doubts about whether the Fed will stick to its plan for aggressive rate hikes.
Many Fed watchers expect a smaller quarter-point increase, and some say the U.S. central bank will pause altogether after a two-day meeting starting Tuesday.
Before the collapse of Silicon Valley Bank and the ensuing fallout, Fed policymakers were on the verge of raising rates by as much as 50 basis points after a series of data suggested the economy was much stronger than officials at the start of the year thought. However, given the volatility in the financial market, all eyes will be on the March 21-22 meeting of the Fed.