Warren Buffett, whose Berkshire Hathaway Inc. (BRK/A) has more than $20 billion invested in U.S. banks, said the nation’s lenders have “liquidity coming out of their ears” and are in better shape than European rivals.
“I would put European banks and American banks in two very different categories,” Buffett, Berkshire’s chief executive officer, said May 5 at the firm’s annual meeting in Omaha, Nebraska. “The American banking system is in fine shape. The European system was gasping for air a few months back” until getting assistance from the European Central Bank, he said.
Wall Street firms including JPMorgan Chase & Co. and Bank of America Corp. (BAC), emboldened after raising capital levels ahead of stricter international guidelines, are contesting efforts by U.S. policy makers to limit trading and risk. European banks have struggled amid the continent’s sovereign debt crisis and turned to the ECB for 1 trillion euros ($1.3 trillion) in three- year loans at a 1 percent interest rate.
Buffett, 81, is seeking to insulate Berkshire’s holdings from the concerns that weighed on the stocks of European lenders, said Mark Williams, a former Federal Reserve bank examiner who teaches finance at Boston University. Bank of America and JPMorgan posted their worst weekly declines of the year in the five days ended May 4 amid signs the European crisis is worsening as the Euro Stoxx Banks Index (SX7E) slumped 6 percent.
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