With the failure of Silicon Valley Bank, Signature Bank, and Silvergate Capital Corp. this month, Berkshire Hathway CEO Waren Buffet is allegedly in discussions with the Biden administration.
There is a lengthy history of Buffett supporting the US banks throughout the financial crisis. The Oracle of Omaha’s frugal decision has helped two huge banks overcome the crisis during their roughest period.
Investment of $5 billion to Goldman Sachs
The renowed investor made a $5billion investment in Goldman Sachs in 2008, during the height of global financial crisis, to increase the company’s capitalization and liquidity in tumultuous circumstances.
Buffett’s choice from bank then has resulted in a profit of about $3.1 billion for him. A short time after Lehman Brothers failure, Buffett bet into Goldman Sachs. 84% of Goldman Sachs stock was sold in 2020 by Berkshire Hathway Inc’.
Buffett one magical call may have helped save the US economy
Buffett called Henry “Hank” Paulson, the treasury secretary, late once night in october 2008 with a suggestion for how the US government might be able to revive the economy.
In “Panic: The Inside Story of the 2008 Financial Crisis, “a documentary, Buffett is quoted as saying that when the major banks, Wachovia and Washington Mutual, failed, he shared his concept.
“It could make more sense to put more cash in the banks than it would to attempt to buy these assets, “Buffett said to Paulson.
The concept was discussed at the Treasury at the time by the CEOs of the largest banks, including John Mack of Morgan Stanley, Jamie Dimon of J.P. Morgan, Lloyd Blankfein of Goldman Sachs etc.
The conference ultimately resulted in the Treasury using TARP funds to inject $250 billion into the banking system.
The strategy wasn’t welcomed by everyone. The action, in my opinion, probably avoided a depression, according to former US President George W. Bush.
Paulson Said, ” Bailouts were the most successful programme that was universally despised in human history.
