Is Buffet biased on US banking Sector

Wells Fargo is his favourite bank. But that apart, Warren Buffet has a good reason to stake his reputation for supporting US banks. As per Forbes, his investment in US banks is valued at US$ 24 bn of which US$ 14 bn is in Wells Fargo alone. Understandably, the legendary value investor is keen to back the sector that investors have come to despise. In America at least.

Now, not every American bank is set to go the Lehman way. Wells Fargo, in particular, is known to have conservative policies and is emulated by the best banks in India. But Buffett's wager on the likes of Bank of America were driven more by the ridiculously under-priced warrants and preference shares he pocketed. Something that retail investors cannot dream of. Also, it is true that Wall Street regulation in recent years have tried to do away with bank bailouts. Bonuses have also been pared or deferred. But that has added very little credibility to the banking system. Thus, Buffett's view on the stability of US banks is best treated as his personal view. And one of the few instances where we would beg to disagree.