“‘It’s not nearly as bas as it was in 2008. But trouble happens to banking, just like trouble happens everywhere else. In the good time, you get into bad habits…When bad times come, they lose too much.’”
That’s Charlie Munger, the 99-year-old vice chair of Berkshire Hathaway Inc.
BRK.A,
BRK.B,
in an interview with the Financial Times published Sunday, in which the newspaper said he warned that U.S. banks are “full of” bad loans on commercial property.
Munger observed that banks were already retreating from commercial property, telling the FT that “every bank in the country is way tighter on real-estate loans today than they were six months ago.”
Munger will again appear with Berkshire Chairman and Chief Executive Warren Buffett at Berkshire’s annual meeting on Saturday,
Related: Why First American Trust’s chief investment officer sees no quick end to regional-bank turmoil
The failure of Silicon Valley Bank and Signature Bank in March sparked worries over the banking sector, particularly regional banks, as investors pulled deposits. SVB’s collapse put a spotlight on potentially painful losses lurking at banks from trillions of dollars in commercial-real-estate loans on their books.
Meanwhile, the focus over the weekend was on First Republic Bank
FRC,
which has struggled to recover from a sharp drop in deposits. News reports said a winning bid for the bank could be accepted by the Federal Deposit Insurance Corp. as early as Sunday evening.
See: FDIC asks banks for final bids for First Republic by Sunday
Stock-market investors last week largely brushed off banking jitters. Major U.S. stock indexes
DJIA,
COMP,
rose Friday, while the Cboe Volatility Index
VIX,
sometimes referred to as Wall Street’s fear gauge, ended at a nearly 18-month low.
U.S. stock-index futures ticked slightly lower Sunday evening. Futures for the S&P 500
ES00,
Dow industrials
YM00,
and Nasdaq-100
NQ00,
were down 0.1%.
