OMAHA, Nebraska (Reuters) – Warren Buffett on Saturday criticized the bank’s handling of recent turmoil in the banking industry, saying a debt ceiling confrontation could bring “disruption” to the financial system. rice field. The United States and his conglomerate Berkshire Hathaway (BRKa.N).
At Berkshire’s annual shareholder meeting, Mr. Buffett criticized how politicians, regulators and the media have dealt with the recent failures of Silicon Valley Bank, Signature Bank and First Republic Bank, calling them “extremely successful.” It said the “poor” message unnecessarily frightened depositors.
“Fear is contagious,” he said, adding that “you can’t run an economy” when people worry about whether their money is safe in banks.
Buffett also warned of a growing “tribalism” in Washington, where partisanship drives people past each other.
“We have to refine our democracy in a way,” he said. “But if I still had the choice, I wanted to be born in America. America is a better world than it’s ever been.”
Buffett said hours after Berkshire posted a quarterly profit of $35.5 billion and announced a $4.4 billion share buyback.
In contrast, it sold $13.3 billion in other companies’ stocks in the quarter when the S&P 500 Index (.SPX) was up 7%.
The sixth richest person in the world, Buffett has run Berkshire since 1965, and his dozens of businesses include Geico auto insurance, BNSF railroads, and consumer names such as Dairy Queen and Fruit of the Loom. It is included.
Berkshire also owns $328 billion in stock, nearly half of which is in Apple (AAPL.O).
At the conference, Berkshire’s Chairman and Chief Executive Officer Buffett, 92, and Vice Chairman Charlie Munger answered five hours of shareholder questions. Vice-Chairs Greg Abel, 60, and Ajit Jain, 71, joined in the morning.
Buffett reiterated on Saturday that Abel would succeed him as CEO, but added that there were no plans if Abel couldn’t.
At the meeting, Berkshire shareholders re-elected all directors and rejected shareholder proposals on climate change, diversity and political activism.
light match
Buffett said regulators were right to insure depositors at Silicon Valley banks, saying otherwise “it would have been devastating.”
He also said banks’ shareholders and management should take the risk of poor management, and Munger criticizes management as more interested in getting rich than their customers.
“A lit match can turn into a blaze or be blown out,” Buffett said.
Buffett also said he could not believe that politicians and regulators would be willing to “disrupt the global financial system.” It also includes cases where a deadlock about what can be done has not been broken.
Anticipating the banking question, Buffett placed a sign in front of him that read “Available for Sale” and a sign in front of Munger that read “Hold To Maturity” to elicit laughter.
These referred to how lenders account for securities, a central issue in the recent banking crisis.
Buffett said Berkshire is cautious with banks and has sold bank stakes in the past six months.
Saturday’s conference is the centerpiece of what Buffett calls “Woodstock for capitalists,” drawing tens of thousands of people to his hometown of Omaha, Nebraska.
Attendance surged from 2022, with Berkshire receiving ticket requests from 45 countries. Unlike last year, the downtown arena hosting the conference was full.
MUNGER: Get used to less
In discussing Berkshire’s performance, Buffett said much of its business could probably do worse in 2023 than it did in 2022 as economic activity slowed.
But Berkshire said it could offset this with more income from investments, such as the $7 billion Treasury bond it bought in April.
Buffett defended the size of Berkshire’s $151 billion investment in Apple, saying consumers are less likely to part with a $1,500 iPhone than, say, a $35,000 second car.
“Apple is unlike any other business we own,” Buffett said. “It just happens to be better business.”
Berkshire, which owns nearly a quarter of Occidental Petroleum (OXY.N), said it had no plans to control the oil company.
Munger provoked a muffled groan, saying that he, value investors like Buffett, and much of the audience “should get used to reducing profits.”
Buffett also said the 15% tax rate doesn’t bother him. A 2021 agreement by 137 countries to enact a minimum corporate tax at that level has not been implemented by the United States.
Munger, the longtime Chinese bull who spearheaded the investment in Berkshire’s electric car company BYD Co, also called for easing tensions and increasing trade between China and the United States.
“It will be of mutual benefit to us,” he said.
Buffett cited these tensions by saying he was more comfortable deploying capital in Japan than in Taiwan.
Abel, who oversees Berkshire’s non-insurance businesses, also said the BNSF was taking the recent spate of train derailments seriously across the industry and that “it’s imperative that we respond appropriately.”
waiting online
Ahead of the meeting, dozens of uniformed pilots from the Berkshire-owned NetJets demonstrated outside the arena to protest low pay, long hours and fatigue.
Meanwhile, thousands of shareholders lined up outside the arena before doors opened at 7am Central Daylight Time (1200 GMT). Many realized that given Buffett and Munger’s age, this could be one of their last chances to see them.
Vidhya Vivekananda, an investment official from Vancouver, Canada, said she and her husband arrived 30 minutes before the first meeting.
“It’s been on our to-do list for a long time,” she said. “I don’t know how long it will be before Warren and Charlie take it over.”
Yongsheng Zhao, a researcher at a wealth management firm in Shanghai, said he showed up in the middle of the night with a chair to visit Buffett and Munger for the eighth time.
“I was inspired by their passion and normalcy. I hope they can continue for another five years or more.”
Reporting by Jonathan Stempel of Omaha, Nebraska. Additional reporting by his Carolina Mandl and John McCrank in New York. Edited by Megan Davies, Ira Iosebashvili, Diane Craft
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