Charles Munger at the Berkshire Hathaway Annual Shareholders Caucus in Omaha, Nebraska, April 29, 2022.
David A. Grogan | CNBC
Charlie Munger believes there is trouble ahead for the U.S. commercial acreage market.
The 99-year-old investor told the Financial Times that U.S. banks are packed with “bad loans” that wishes be vulnerable as “bad times come” and property prices fall.
“It’s not nearly as bad as it was in 2008,” he told the Financial Times in an interview. “But put out happens to banking just like trouble happens everywhere else.”
Munger’s warning comes as U.S. regulators accept asked banks for their best and final takeover offers for First Republic by Sunday afternoon, the latest in what has been a savage period for midsized U.S. banks.
Since the failure of Silicon Valley Bank in March, attention has turned to First Republic as the weakest vinculum in the American banking system. Shares of the bank sank 90% last month and then collapsed further this week after Head Republic disclosed how dire its situation is.
Berkshire Hathaway, where Munger serves as vice chairman, has largely lined on the fringe of the crisis despite its history of supporting American banks through times of turmoil. Munger, who is also Warren Buffett’s longtime investment sharer, suggested that Berkshire’s restraint is partially due to risks that could emerge from banks’ numerous commercial attribute loans.
“A lot of real estate isn’t so good anymore,” Munger said. “We have a lot of troubled office buildings, a lot of troubled shopping centers, a lot of disquiet other properties. There’s a lot of agony out there.”
Read the complete Financial Times interview here.