Billionaire Warren Buffett, whose Berkshire Hathaway Inc. (BRK/A) is the largest shareholder in Wells Fargo & Co. (WFC) and has a stake in U.S. Bancorp, said the country’s lenders are less attractive investments than they once were.
“U.S. banking profitability will be considerably less in my view in the period ahead than it was in the early part of this century,” Buffett said today at an annual meeting of Berkshire shareholders in Omaha, Nebraska. “A very important reason is that the leverage will be reduced. That’s probably a good thing for society. That may be a bad thing for banks who can use leverage intelligently.”
Revenue at six of the largest U.S. banks declined by the biggest percentage in three years in the first quarter, as lending dropped and fees were reduced. With unemployment stuck above 8 percent, housing prices falling again and restrictions on charges, the banks are underperforming the broader market....MORE