QuestionerGiven the reason challenge faced by the major U.S. Bank, what is your overall outlook on the banking industry? How do you access the risks and the opportunity in this section?
WarrenWell, anticipating a few questions on banks, I decided we should start using bank language here to describe. And Charlie, the situation in banking is is very similar to what it's always been in banking, that fear is contagious, always. And historically, sometimes the fear was justified, and sometimes it wasn't. My dad lost his job in 1931 because of a bank run, and they had a bank run on state banks. And the head of the Allman National Bank said, well, we're a national bank, and they didn't have a run on the national banks. And of course, they both face the same problem. So it used to be that if you saw people lining up at a bank, the proper response was to get into the line. And they'd always leave it. And the story is that Sidney Weinberg of Goldman Sachs during one of the great bank runs back in 1907 or thereabouts, had a job as a runner at Goldman Sachs and asked us if he could take the week off. And boss said, sure, not much is going on anyway. So he got in line, whether it was the Nick or Barker Trust or wherever. And as he got toward the front of the line, he sold his place in line to somebody. He didn't have an account of the bank, but that was an asset. And the banking system has changed so much over the years. And we did something enormously sensible, in my view. When we set up the FDIC, as many as 2,000 banks had failed in one year back after World War I. I mean, bank runs were just part of the picture. And if you have people that are worried about whether their money is safe in the bank and all fine withdraw, you can't run an economy very well. So the FDIC was very logical. It got changed over the years some. But here we are in, you know, 2,000. 23, and we actually see the FDIC pay off at a hundred cents on the dollar to everybody or make it available on all demand deposits. And yet you still have people very worried about their, periodically, geographically, all kinds of crazy ways. And that just shouldn't happen. So the messaging has been very poor. It's been poor by the politicians who sometimes have an interest in having it poor. It's been poor by the agencies. And I'd say it's been poor by the press. I mean, you shouldn't have so many people that misunderstand the fact that although there may
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Warrenbe a debt ceiling, it's going to get changed. Although there's a $250,000 limit on the FDIC, the FDIC and the U.S. government is the U.S. government And the American public have no interest in having a bank fail or have deposits actually lost by people. We had a demonstration project, the weekend of Silicon Valley Bank, and the public is still confused. So it's really, it's something to have a law that was passed in 19, or a law that became effective in 1934, although modified in some ways, not understood about something as important as as a banking system, I don't think the American public is that dumb. And I just, well, I made that offer over in Tokyo, incidentally, that I haven't heard from anybody that wants to take up my million dollar bet on whether the public will lose money and if they have a demand deposit at a bank, no matter what the size. And if people think deposits are sticky anymore, they're just living in a different era. you know, you can press a button, you don't have to get in a line and wait for days and have to tell her counting out the money slowly in gold so that you hope the line goes away. You can have a run in a few seconds. So the way it hasn't been addressed properly is a problem, and who knows where it leads.