Shareholders watch Warren Buffett and Charlie Munger from the overflow room during the Berkshire Hathaway annual meeting on Saturday, May 6, 2023, in Omaha, Neb.
Rebecca H. Gratz | AP
The FDIC protected SVB customers in the process by invoking the systemic risk exception during the March tumult, allowing the regulator to make all depositors whole, even if their accounts exceeded the $250,000 coverage threshold.
“It would’ve been catastrophic” if regulators hadn’t done that, Buffet said during his annual shareholder meeting.
Allowing uninsured depositors to lose money would’ve “started a run on every bank in the country,” he said.
So the move, which brought criticism because it protected venture capital investors, startups and other sophisticated players, was “inevitable” in Buffett’s view.
Protecting uninsured depositors contributed to the estimated $20 billion hit that the FDIC’s Deposit Insurance Fund took in the SVB receivership. The biggest U.S. banks are expected to cover the economic cost of that through special fees.
This story is developing. Please check back for updates.