Legendary investor Warren Buffett stated that US authorities must hold the CEOs of bankrupt banks accountable for their recent failures.
According to the billionaire, the heads of the financial institutions that went bankrupt this spring should be held responsible for their actions that led to the crisis.
The CEO of Berkshire Hathaway said that even though mistakes can be detected and corrected in some cases, the insufficient regulation of the banking sector prevented it. The billionaire drew particular attention to "messed-up incentives" and poor public awareness, which allegedly triggered the panic. According to Buffett, the culprits responsible for the US banking crisis should be fined.
Previously, the investor cited First Republic Bank, which offered its clients mortgages that were not guaranteed by the government. Those mortgages were offered at fixed rates, sometimes for a period of 10 years. According to the billionaire, it was "a crazy proposition."
Earlier, the US authorities rescued First Republic Bank by selling it to JPMorgan Chase. Initially, however, the Department of Financial Protection and Innovation (DFPI) of the state of California shut down the bank before the deal was approved by the Federal Deposit Insurance Corporation (FDIC).
Despite the current challenges facing lending institutions, such as the California-based PacWest Bancorp, the Federal Reserve considers the American banking system to be resilient.
