Buffett Says Banks Cleared of Excess Risk Pose No Threat to U.S.

Thanks to Will for passing this along.

Warren Buffett, the billionaire investor who oversees stakes in some of the largest U.S. banks, said the nation’s lenders have rebuilt capital to the point where they no longer pose a threat to the economy.

“The banks will not get this country in trouble, I guarantee it,” Buffett, chairman and chief executive officer of Omaha, Nebraska-based Berkshire Hathaway Inc. (BRK/A), said in a phone interview last week. “The capital ratios are huge, the excesses on the asset side have been largely cleared out.”

Lenders including Bank of America Corp. (BAC) and Citigroup Inc. (C) have sold assets, cut jobs and bolstered balance sheets after repaying taxpayer bailouts from 2008, when the companies were overwhelmed by losses on securities tied to the housing market. Those actions helped boost financial stocks last year and increased the value of Berkshire’s holdings.

Buffett’s firm has investments in at least four of the seven biggest U.S. lenders by assets, including a stake of more than $14 billion in San Francisco-based Wells Fargo & Co. (WFC), $5 billion in Bank of America and warrants that allow it to buy $5 billion of Goldman Sachs Group Inc. shares. Berkshire also has a holding in U.S. Bancorp.

“Our banking system is in the best shape in recent memory,” Buffett said.