ADMINISTRATION I WOULD NEVER FEEL FREE TO CALL THE PRESIDENT OF THE UNITED STATES >> OKAY. LET'S TALK ABOUT WHAT'S HAPPENING IN THE BANKING SECTOR RIGHT NOW. IS THIS A BANKING CRISIS IS THIS FINANCIALS IN TURMOIL? IS THIS BANKING CRISIS 2.0 WHAT WOULD YOU CALL WHAT WE HAVE BEEN SEEING HAPPEN >> I WOULD SAY THAT THE -- SOME OF THE DUMB THINGS THAT BANKS DO PERIODICALLY, WELL, HAS BECOME UNCOVERED DURING THIS PERIOD, AND AS ONE BANKER TOLD ME ONE TIME, I DON'T KNOW WHY WE KEEP LOOKING FOR NEW WAYS TO LOSE MONEY WHEN THE OLD ONES ARE WORKING SO WELL. AND THEY MADE THE SAME MISTAKE, SOME BANKS IN THIS PERIOD, BY -- THEY HAVEN'T MADE AS MANY MISTAKES, THEY EXPECT TO MAKE SOME MISTAKES, BUT THEY HAVEN'T -- CREDIT CARD LOANS, THAT'S PART OF THE GAME, BUT THEY HAVEN'T MADE THE SAME SORT OF MISTAKES THAT THEY MADE BACK IN 2008 OR '09, BUT THEY HAVE MISMANAGED ASSETS AND LIABILITIES AND BANKERS HAVE BEEN ATTEMPTING TO DO THAT FOREVER AND EVERY NOW AND THEN IT BITES THEM IN A BIG WAIT. IT IS JUST AMAZING TO ME THAT BANKS COULD MAKE PRESENTATIONS TO FINANCIAL ANALYSTS AND EVERYTHING AND IF ONE BANK BONDED AT 100 AND ANOTHER BOUGHT AT 96 AND THEY BOTH HELD A MATURITY, ONE BANK AT 100 AND SOME AND ONE BANK AT 96, IT IS ACCOUNTING PROCEDURES THAT HAVE DRIVEN SOME BANKERS TO DO SOME THINGS THAT MAY HAVE HELPED THEIR CURRENT EARNINGS A LITTLE BIT, AND CAUSED THE RECURRING TEMPTATION TO GET A LITTLE BIT BIGGER SPREAD ON -- REPORT A LITTLE MORE IN EARNINGS AND THE RESULT YOU CAN PREDICT, AND ONCE THEY START LOOKING AT ONE THAT DOES IT, THEN THEY START LOOKING AT OTHERS, AND PRETTY SOON, YOU KNOW, THAT -- EVERYBODY IS IN A POSITION OF LOOKING AT A NUMBER THAT NOBODY LOOKED AT WHEN IT WAS PRESENTED TO THEM A YEAR AGO IF YOU'RE ABOVE THE 10K OR ANYTHING OF THE SORT THE BANKS DIDN'T PAY ATTENTION TO WHAT WAS GOING ON AND I WOULD READ INVESTOR CONTACT WHEN THEY HAD MEETINGS WITH FINANCIAL ANALYSTS OR THE PEOPLE WHO FOLLOW BANKING AND NOBODY BROUGHT UP THE POINT. AND, BELIEVE ME, IF WE GOT A $50 BILLION LOSS AT BERKSHIRE, WE WOULD EXPECT PEOPLE TO KNOW ABOUT IT AND IT HAS HAPPENED BEFORE IT HAS HAPPENED THIS TIME. IT WILL HAPPEN AGAIN SOME DAY. >> DID YOU SEE THIS? YOU WERE READING THROUGH THE REPORTS? YOU FOLLOWED ALL THE BANKING EARNINGS THAT WERE COMING IN, SO YOU NOTICED IT YOU SAW IT >> SURE, I NOTICED IT. >> IS THAT WHAT YOU SAW -- AND SOLD SO MANUFACTY OF THE BANKING STOCKS >> WE HELD SOME OF THEM FOR 25 YEARS, BUT I DON'T LIKE IT WHEN PEOPLE GET TOO FOCUSED ON THE EARNINGS NUMBER AND FORGET THE BANKING PRINCIPLE, I WON'T GET INTO ANY NAMES OR ANYTHING LIKE THAT, BUT IT HAPPENED AT VARYING DEGREES. AND THEY SAY THE BIG BANKS DID THIS, THAT ISN'T TRUE. I MEAN, I KNOW WHO HAS BEEN HOLDING LONG-TERM INSTRUMENTS AND IF THEY TAKE MORE COMMERCIAL MORTGAGES OR SOMETHING OF THE SORT, THEY CARRY THEM AT COST, BASICALLY. AND CAN'T SELL THEM AT THE RIGHT COST AND IT IS IMPORTANT -- IT IS IMPORTANT THAT BANKS RETAIN THE CONFIDENCE OF THE PUBLIC AND THEY CAN LOSE IT, YOU KNOW, IN SECONDS. AND WE SAW THE COUNTRY THAT WAS NOT WORRIED ABOUT BANKS, YOU KNOW, UNTIL ABOUT WEDNESDAY OR THURSDAY OF THE WEEK WHEN SILICON VALLEY --ALL OF A SUDDEN, EVERYBODY WAS WORRIED ABOUT IT ALL OVER THE COUNTRY. AND THE INTERESTING THING, OF COURSE, IS THAT THAT -- IT WILL NOT COST THE GOVERNMENT A PENNY. PEOPLE THINK THAT, YOU KNOW, THAT SOME OF THE GOVERNMENT IS GOING TO GET HUNG UP WITH US THE FDIC IS IN EFFECT A VERY PECULIAR MUTUAL INSURANCE OPERATION THAT IS RUN BY THE GOVERNMENT, BUT IS FINANCED BY THE BANKS. AND FDIC HAD 120 BILLION OR SO AT THE START OF THE YEAR AND THAT'S ALL THE MONEY THAT BANKS HAVE PAID IN, LEST WHAT THE FDIC HAD TO PAY OUT ON LOSSES AND THE FDIC HAS TO PAY OUT $250 BILLION THIS TIME OR $300 BILLION, THEY JUST ASSESS THE BANKS MORE AND THEY DON'T DO IT IN A VERY BUSINESS-LIKE MANNER BECAUSE THE PUBLIC HAS THE IMPRESSION THAT THE FDIC IS THE UNITED STATES GOVERNMENT AND SO ON AND, OF COURSE, THEY DO APPOINT THE PEOPLE, BUT THE COSTS OF THE FDIC, INCLUDING THE COSTS OF THEIR EMPLOYEES AND EVERYTHING ELSE IS BORN BY THE BANKS. SO BANKS HAVE NEVER COST THE FEDERAL GOVERNMENT A DIME. BUT THAT -- THE PUBLIC DOESN'T REALLY UNDERSTAND THE WHOLE FDIC AND THE COMMENTS OF PUBLIC OFFICIALS CONFUSE IT AND THE ISSUE ENORMOUSLY FDIC WAS SET UP TO OPERATE ON, I THINK, JANUARY 1st, 1934, YOU THINK SOMEONE WOULD HAVE GOTTEN THROUGH WRITING WHAT IS THE ESSENCE OF THIS FDIC, WHICH IS -- A FANTASTICALLY GOOD -- OF THE NEW DEAL 2,000 BANKS FAILED, AND I DON'T KNOW WHETHER 1920 OR '21, I DON'T KNOW, SOMETHING LESS THAN 5,000 BANKS IN THE UNITED STATES AND, I MEAN, IT WAS A PARALYZING THING TO HAVE A BANK FAILURE IN THIS COUNTRY AND MY DAD LOST HIS JOB IN 1931, HE LOST HIS SAVINGS, AND THE BANK FAILED THAT HE WORKED IN, DOWNTOWN IN OMAHA, AND PEOPLE SHOULDN'T BE WORRIED ABOUT LOSING THEIR MONEY AND THE DEPOSITS THEY HAVE IN AN AMERICAN BANK, AND TODAY THEY HAVE NO REASON TO WORRY. BUT, THE MESSAGE HAS GOTTEN VERY CONFUSED AND PEOPLE DON'T REALLY UNDERSTAND HOW IT ALL WORKS, AND, YOU KNOW, POLITICIANS CAN MAKE HAY OUT OF IT AND ALL KINDS OF THINGS, BAD THINGS HAPPEN WHEN PEOPLE DON'T UNDERSTAND SOME MAJOR INSTITUTION OR WHO ACTUALLY BEARS THE COSTS AND WHAT THE RESPONSIBILITIES ARE. AND NOBODY IS GOING TO LOSE MONEY ON A DEPOSIT IN THE U.S. BANK, DON'T KNOW ABOUT THE RES
