An associate of Warren Buffett warned about the risks in the US commercial real estate market

Banks are burdened with “bad loans”, which is why a storm is brewing in the American commercial real estate market in the face of falling prices. This was reported by Warren Buffett’s associate, vice-chairman of the board of directors of Berkshire Hathaway Charlie Munger in an interview with the Financial Times.

Photo: depositphotos 5

►Read the “Ministry of Finance” page on Facebook: главные финансовые новости

What Charlie Munger says

“We have a lot of problem office buildings, a lot of problem shopping centers, a lot of other problem real estate,” said the 99-year-old investor. He added that the real estate sector is “in agony.” However, the situation is “far from as bad as in 2008,” the investor believes. “Problems happen in the banking sector just like in any other,” Munger noted.

According to him, banks are already less willing to give loans to builders of commercial premises.

“Every bank in the country has become much more cautious with real estate loans than six months ago,” the investor said, adding that there are “too many problems” with such loans.

Berkshire has helped banks through difficult times before. After the collapse of Lehman Brothers in 2008, the company helped Goldman Sachs, investing $5 billion in the bank’s shares. In 2011, Bank of America received a capital infusion of a similar amount, faced with a collapse of shares against the background of losses due to low-quality mortgage loans. But this time, Berkshire refrained from taking action after the collapse of Silicon Valley Bank and Signature Bank, the FT noted.

“We were somewhat disappointed in the banks. It’s not so easy to manage a bank wisely, hell, there’s a big temptation to do wrong things,” said the investor. He added that Berkshire had invested in banks that “worked out great.”

Read: American First Republic Bank is preparing to be transferred to foreign management — Reuters

Let’s remind

In March, three American banks collapsed at once. The first to close was Silvergate Bank, one of the main banks for the American crypto market. After that, the local authorities closed the Silicon Valley Bank, which specialized in working with startups, then the New York Signature Bank.

Reuters and Bloomberg, citing sources, wrote that after the collapse of the banks, high-ranking American officials consulted with the head of Berkshire Hathaway, billionaire Warren Buffett. The interlocutors of the agency note that the negotiations were focused on Buffett’s possible investments in regional US banks, but the billionaire also gave the American authorities advice and recommendations of a broad nature regarding the “current shocks”.

One more American bank — First Republic — faced problems amid the collapse of its competitors: its shares lost 97% in price since the beginning of the year. At the end of April, the US authorities asked other banks, including JPMorgan and PNC, to provide final proposals for the purchase of First Republic assets.

🕵️ We created a small survey to learn more about our readers.

💛💙Your answers will help us become the best, pay more attention to topics that are interesting to you. 🤗 We will be grateful if you find a minute to answer our questions.

Author: Editor of the news feed Yaroslav Holoborodko Writes on the topics: Macroeconomics, stock market, cryptocurrency

Source: Ministry of Finance

Views: 7