Warren Buffett says that US banks are “in the best shape in recent memory,” as he mentions this to Bloomberg News recently. He also believes that they will not cause the next big financial meltdown.
As the CEO and chairman of Berkshire Hathaway Inc., based out of Omaha, Nebraska, Warren Buffett has earned billions of dollars over the past four years when he started investing in Wells Fargo and Company, Goldman Sachs, U.S. Bancorp and Bank of America. Let’s not forget about General Electric as well. They are all companies that operate in the finance industry, and they each fall under the banking category.
And if he wanted to, Warren Buffett could earn another $3 billion right now by cashing in discount stock purchase warrants from Bank of America. He chose to wait instead, and here’s why:
“We’re in no hurry,” said Buffett to Bloomberg. “Nine years from now I would think that Bank of America as well as Wells Fargo and probably the other major banks will be worth considerably more money than they are now.”
Mister Buffett says that the banks are so much more healthy right now since the financial crash during 2008 because they have cleared out the bad loans on their books, rebuilt their capital, lowered their risk, cut their expenses and repaid the taxpayer bailouts throughout a very fragile real estate market.
There are many experts that still worry the biggest banks in the US are too big, and they can easily repeat the same problems that triggered the recession that we went through recently. Buffett doesn’t believe this.
“The banks will not get this country in trouble, I guarantee it… We do not have an unusually concentrated banking system compared to the rest of the world, and there are certain advantages in the largest capital market in the world to having banks that are somewhat consistent with the size of those markets.”