Warren Buffett says bankers deserve ‘punishment’ for role in recent run of failures

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

“Fear is contagious,” he said, adding that “you can’t run an economy” when people worry if their money is safe in banks.

Mr Buffett spoke hours after Berkshire posted a $35.5bn (€32bn) quarterly profit and said it bought back $4.4bn of its own stock, a sign it considered the shares undervalued.

In contrast, it sold $13.3bn of other companies’ stocks, in a quarter where the S&P 500 Index rose 7pc.

Mr Buffett said regulators were right to guarantee depositors of Silicon Valley Bank, saying that not doing so “would have been catastrophic”.

He also said bank shareholders and executives should bear the risks of mismanagement, with vice-chair Charlie Munger criticising executives concerned more with getting rich than with customers.

“A lighted match can be turned into a conflagration or can be blown out,” Mr Buffett said. “You have to have punishment for people who do the wrong thing.”

Mr Buffett said Berkshire is cautious about banks and sold some bank stocks in the past six months.

In discussing Berkshire’s performance, Mr Buffett said perhaps a majority of its operating businesses may fare worse in 2023 than in 2022 as economic activity slows.

But he said Berkshire can offset this with more income from investments, including $7bn of Treasury bills bought in April.

Mr Buffett defended the size of Berkshire’s $151bn Apple investment, saying consumers are less likely to shed their $1,500 iPhones than, for example, their $35,000 second cars.

“Apple is different than the other businesses we own,” Mr Buffett said. “It just happens to be a better business.”

Berkshire recently held a 5.6pc stake in Apple, and Mr Buffett said the company could buy more.