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Biden In Touch With Buffett On Bank Crisis

What do you call it when an 80-year-old seeks the advice of a 92-year-old?

Answer: the worst financial crisis since Lehman.TM

Realizing that Berkshire Hathaway had a near-record $128 billion in
cash at the start of the year, more than most countries...

... Joe Biden, who on Monday lied to the American people that the "our
banking system is safe"...

    The bottom line is this: Americans can rest assured that our
banking system is safe, and your deposits are safe.
pic.twitter.com/hM36ZmZ22x
    — Joe Biden (@JoeBiden) March 13, 2023

... appears to have changed his mind and is urgently hoping to
recreate the zeitgeist surrounding the infamous Oct 16 "Buy American"
NYT op-ed by Warren Buffett.

... which ended up being memorable but only after the biggest bailout
of US banks and capital markets in history and the start of the
neverending QR/ZIRP->bust->QE/ZIRP cycle.

According to Bloomberg, Berkshire’s Warren Buffett has been in touch
with senior officials in President Joe Biden’s administration in
recent days as the regional banking crisis goes from bad to worse to
Savings And Loan 2.0 (if only America had any savings left).

The buzz of private jet activity centering on Omaha was first reported
by Fuzzy Panda who noted that "a large number (>20) of Private Jets
landed in Omaha yesterday afternoon" with jets flying from HQs of
Regional Banks, Ski Resorts & DC, and prompting the question "Did
Buffett just fly all the regional bank CEOs into Omaha & offer a deal
to SAVE the banks?"

    The Private Jets arrived in Omaha in multiple groups. Sometimes
landing at almost the same exact time.

    Did Buffett schedule some meetings with different groups of CEOs every hour?

    Number of Jets arriving:
    5 ~10am (est)
    3 ~2pm
    5 ~3:30pm
    5 ~5pm
    6 ~6:15pm
    3 ~7:30pm pic.twitter.com/68Ok6zl8cA
    — FuzzyPanda 🇺🇦 (@FuzzyPandaShort) March 17, 2023

For now the answer is unclear, nor is it clear what role, if any, the
billionaire investor may play to contain the crisis after the
cascading failures of Silicon Valley Bank, Signature Bank and
Silvergate.

Buffett, who will be 100 years old in 2031, has a long history of
stepping in to aid banks in crisis, providing funding at daylight
robbery terms (10% prefs + warrants), and leveraging his cult
investing status to restore confidence in ailing firms. Bank of
America won a capital injection from Buffett in 2011 after its stock
plunged amid losses tied to subprime mortgages. Buffett also tossed a
$5 billion lifeline to Goldman in 2008 to shore up the bank following
the Lehman Brothers collapse.

Meanwhile, Biden’s team, wary of political blowback among
progressives, has sought to implement bailouts that are spun as
magically not being bailouts and which don’t require direct government
spending from taxpayers, including the Federal Reserve’s actions
(narrator: of course they require taxpayer backing). Alas, so far
Biden's plan has been a disaster: on Thursday, big US banks
voluntarily deposited $30 billion to stabilize First Republic Bank
this week, a move regulators described as “most welcome.” On Friday,
the stock collapsed another 50%.

Any investment or intervention from Buffett or other figures would
continue that playbook, looking to stem the crisis without direct
bailouts.... until of course direct bailouts, rate cuts and QE are
inevitable since a cascading wave of defaults among the regional banks
would lead to another great depression as small/medium banks account
for 50% of US commercial and industrial lending, 60% of residential
real estate lending, 80% of commercial real estate lending, and 45% of
consumer lending.

    This is a serious risk
    — Elon Musk (@elonmusk) March 18, 2023

But before we get there, and since we are now following the playbook
of the 2008 crisis, expect the SEC to "halt short selling of financial
stocks to protect investors and markets", just like it did 3 days
after Lehman collapse sparking the worst banking crisis... until now.