Warren Buffett Consults with Rubber Duckie to Invest $5 bil into Bank of America

Buffett said he conjured the idea while in the bathtub

Rubber Duckie, you're so fine

And I'm lucky that you're mine

ABC News Money
By: Susanna Kim
August 25, 2011

Berkshire Hathaway, led by billionaire Warren Buffet, announced it will buy $5 billion worth of Bank of America shares in a private offering. BofA stock soared though U.S. stock markets were down Thursday morning on yet another gloomy unemployment claims report.

Buffett said he conjured the idea while in the bathtub on Tuesday. He called Brian Moynihan, chief executive officer of Bank of America, on Wednesday, he told CNBC.

Stock of Bank of America, the largest bank in the U.S., rose over 20 percent after the market's open but came down slightly later in the morning. At 10:40 AM eastern time, the stock was up 17 percent to $8.18 a share. The Dow Jones industrial average fell 129 points to 11,193.

Jobless claims climbed by 5,000 to 417,000 in the week ended Aug. 20, the Labor Department reported today. Part of the rise was due to new applications from Verizon, where workers had been striking over a contract deal.

Bank of America stock had plunged 47 percent for the year, as embattled CEO Moynihan has tried to manage its pile of bad mortgages and its exposure to the European debt crisis.

But Warren Buffett praised Monyihan and the bank in a statement.

"Bank of America is a strong, well-led company, and I called Brian to tell him I wanted to invest in it," Berkshire Hathaway chairman and chief executive officer Warren Buffett said in a press release. "I am impressed with the profit-generating abilities of this franchise, and that they are acting aggressively to put their challenges behind them. Bank of America is focused on their customers and on serving them well. That's what customers want, and that's the company's strategy."  Read more about the rubber duckie investment

Warren Buffett profits from bailout, is AOK w/grandkids placed in harms way and now advocates paying more taxes

Warren Buffett who profited handsomely from the U.S. Government

placing the Wall Street bank Bailout burden on our grandchildren,

now believes he and his pillagers should pay more taxes.



The $50 Billion Man

New York Times Opinion Page
August 16, 2011
Warren Buffett (not to be confused with a long table full of food...that's a ONE T...aka 1 toddler...he is perfectly okay with dumping the debt on grandkids to make his profit and then op-ed about about paying guilt taxes...pathetic)

OUR leaders have asked for “shared sacrifice.” But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.       

While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.       

These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.       

Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.       

If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.       

To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.       

Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.       

I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.       

Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent.       

The taxes I refer to here include only federal income tax, but you can be sure that any payroll tax for the 400 was inconsequential compared to income. In fact, 88 of the 400 in 2008 reported no wages at all, though every one of them reported capital gains. Some of my brethren may shun work but they all like to invest. (I can relate to that.)       

I know well many of the mega-rich and, by and large, they are very decent people. They love America and appreciate the opportunity this country has given them. Many have joined the Giving Pledge, promising to give most of their wealth to philanthropy. Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.       

Twelve members of Congress will soon take on the crucial job of rearranging our country’s finances.

They’ve been instructed to devise a plan that reduces the 10-year deficit by at least $1.5 trillion. It’s vital, however, that they achieve far more than that. Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness. That feeling can create its own reality.       

Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues. I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get.       

But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.       

My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.

Warren E. Buffett is the chairman and chief executive of Berkshire Hathaway....duh

Tuesday News Recapped in Pictures (Buffett, FDIC, Geithner, GM, QE2)

Warren Buffett: “The worst is behind us, but the pain

will be felt for a long time from what happened,”

New price of Starbucks Tall Skinny Flavored Latte as

FOMC confirms launching Quantitative Easing (QE2)...

To offset Bernanke's money printing, McDonald's offering a

reduced portion QE-2 Value Meal...same great price...

Interior Secretary Ken Salazar announced the oil drilling

moratorium has been lifted and drillers must meet

"the higher bar we have set" in order to get new permits

A Treasury official said the meeting is “an opportunity for

Sec. Geithner and Mr. Akerson (GM-CEO) to meet for the first time.

It is merely a brief meet and greet.”

FDIC proposed a rule that would begin the process of

setting up a mechanism to dismantle a failing too-big-to-fail

Lehman-like mega-bank...

Warren Buffet: "we're not going to have a double-dip recession at all." WAIT: "It's common sense that we are still in a recession."

Before your CNBC Town Hall Meeting, my line will be:

"we're not going to have a double-dip recession at all."

Nice recap by Huffington Post

The Oracle of Omaha told CNBC this morning that it's just plan "common sense" -- "we're still in a recession."

If you've been following Warren Buffett's statements on the economy lately you may be a bit confused. Earlier this month, in an appearance with Microsoft CEO Steve Balmer, Buffett said "we're not going to have a double-dip recession at all." (Presumably this is because, according to Buffett, the first recession never really ended.)

Earlier this week, the National Bureau of Economic Research, the independent body that tracks downturns in the U.S., recently announced that the recession ended in June 2009. But in an interview with CNBC's Becky Quick, Buffett disputed that notion:

BECKY: The NBER said this week that the-- recession officially ended back in June of last year.

BUFFETT: Well, they define it differently. (Laughs.) But I-- I mean, I-- I define it-- I think we're in a recession until real per capita GDP gets back to where it was-- before. That is not the way the National Bureau of Economic Research measures it. But I will tell you that to any-- on any common sense definition, the average American is below where he was before, or his family, in terms of real income, GDP. We're still in a recession. And-- and we're not gonna be out of it for awhile, but we will get out of it.

Buffett added that most small businesses "have come back somewhat" but haven't approached anything near their pre-crisis levels. Banks, Buffett said, are sitting on "trillions" and "dying to get the money out." A host of bad loans and a still sagging consumer, he suggested, have prlonged the downturn. Here's more:

BUFFETT: Our businesses are coming back-- on average, we've got 70-some businesses. But most of them-- the great majority are coming back slowly. If you take our railroad business, and our railroad business is typical of the other railroads in the company. If you take the peak period for shipments and then you go all the way down to the bottom, we're 61 percent of the way back up. That's better, I think, than most businesses are in the country. I don't think most businesses are 61 percent-- our-- our carpet business, our brick business, our insulation business, they're not back 61 percent, but they are moving back.
 

Munger Tells 25 Million Americans To "Suck It In", And To "Thank God For Bank Bailouts" GREAT ZERO HEDGE POST

Zero Hedge

There is a reason why many countries institute mandatory retirement age: it is so that when dementia strikes, and people spout any damn thing that comes to mind, only the nearest four walls are subject to their insanity.

Alas, when it comes to Berkshire Hathaway, no such luck. And while we have extensively discussed Warren Buffett's recent inexorable decline from merely a successful rider of the biggest cheap credit bubble in history to a captured puppet of Wall Street courtesy of his tens of billions of Wall Street-related investments, little has been said about his even older, and apparently even more affected by the unpleasant side-effects of a public televised senescence, sidekick, Charlie Munger.

Luckily, courtesy of Bloomberg we now know just how deep the rot runs in the Berkshire family. During a discussion at the Universtiy fo Michigan, the 86 year old told the 25 million of Americans who comprise the 16.7% of the underemployed population in the country, to "suck it in and cope." Not only that, but apparently, all those who have been without a job for 99 weeks and more and no longer have recourse to insurance benefits, should "thank God for bank bailouts."

Why of course he would say that: after all $26 billion worth of direct BRK investments were the recipient of over $95 billion in bailouts. So when it comes to him, thank god for the bailout indeed... But when it comes to the little man, old Charlie is all about doing the right thing.

It Gets Better

Bank rescues allowed the U.S. to avoid what could have been an “awful” downturn and will help the country as it deals with the housing slump, Munger, 86, said. He used the example of post-World War I Germany to explain how the bailouts under Presidents George W. Bush and Barack Obama were “absolutely required to save your civilization.”

“Hit the economy with enough misery and enough disruption, destroy the currency, and God knows what happens,” Munger said. “So I think when you have troubles like that you shouldn’t be bitching about a little bailout. You should have been thinking it should have been bigger.”

Germany was unable to stabilize its financial system in the 1920s, and, Munger said, “We ended up with Adolf Hitler.”

Complete Zero Hedge Post...WORTH THE READ

Warren Buffett is a bull, no double dip and employing more people than a month ago....

By Andrew Frye and Kelly Bit

Sept. 13 (Bloomberg) -- Warren Buffett ruled out a second recession in the U.S. and said businesses owned by his Berkshire Hathaway Inc. are growing.

“I am a huge bull on this country,” Buffett, Berkshire’s chief executive officer, said today in remarks to the Montana Economic Development Summit. “We will not have a double-dip recession at all. I see our businesses coming back almost across the board.”

Berkshire bought railroad Burlington Northern Santa Fe Corp. for $27 billion in February in a deal that Buffett, 80, called a bet on the U.S. economy. The billionaire’s outlook contrasts with the views of economists such as New York University Professor Nouriel Roubini and Harvard University Professor Martin Feldstein, who have said the odds of another recession may be one in three or higher.

“I’ve seen sentiment turn sour in the last three months or so, generally in the media,” Buffett said. “I don’t see that in our businesses. I see we’re employing more people than a month ago, two months ago.”

The world’s largest economy grew at a 1.6 percent annual pace in the second quarter, exceeding the median forecast of economists surveyed by Bloomberg News, revised figures from the Commerce Department showed on Aug. 27. U.S. economic growth will slow to 2.5 percent next year from a projected 2.7 percent this year as unemployment above 9 percent tempers consumer spending, according to the median forecast of economists surveyed by Bloomberg News this month.

‘Signs of Life’

Buffett built Omaha, Nebraska-based Berkshire into a $200 billion provider of insurance, energy and luxury goods and services over four decades. The company cut about 20,000 jobs last year as demand for its products declined.

The economy is still recovering and isn’t likely to slip back into recession as “signs of life” appear in the U.S., Bank of America Corp. CEO Brian Moynihan said today at an investor conference.

Buffett, who spoke via video connection to an assembly in Butte, Montana, said U.S. banks were ready to boost lending and encouraged entrepreneurs to seek financing for their business ideas. Berkshire is the biggest shareholder of Wells Fargo & Co., the top U.S. home lender.

‘Night and Day’

“It’s night and day from a year, year and a half ago,” Buffett said. “I know Wells Fargo, they would love to have $50 billion more of loans now. Go in and talk to the banker.”

Buffett amassed the world’s third-biggest personal fortune through decades of stock picks and takeovers. Berkshire’s stake in San Francisco-based Wells Fargo was valued at about $8.2 billion at the end of June. Buffett’s firm also owns $5 billion of preferred stock in Goldman Sachs Group Inc. and more than $1.5 billion of shares in U.S. Bancorp, according to data compiled by Bloomberg.

Berkshire gained $395, or 0.3 percent, to $124,372 at 12:48 p.m. in New York Stock Exchange composite trading. The stock has climbed about 25 percent this year, compared with a decline of 2.5 percent for Wells Fargo and a 9 percent drop for Goldman Sachs.

Dylan Ratigan recaps Moody's, Fannie Mae and Freddie Mac

Moody's takes two months to inform its investors that it received a Wells Notice and guess what occured during that period? Yes, the contestant in the red shirt guessed correctly; the CEO of Moody's sold his stock and Warren Buffett did the same!

Everybody loves Warren Buffett as he is the down home ethical guru from Omaha. Maybe the timing of selling Moody's was coincidental, maybe it was simply dumb luck or maybe it what simply what The Oracle of Omaha has been doing for years!

Next up, Fannie and Freddie need more money (roughly $18.5 billion) between the two of them.

Visit msnbc.com for breaking news, world news, and news about the economy

Bailout helps Buffett plenty; He has argued for it and will benefit from it (Charles Piller)

A most informative article and albeit one year old, it remains timely given Buffett's recent comments defending Goldman Sachs and Lloyd Blankfein. Mr. Buffett benefited tremendously from the taxpayer bailout. He comes across as a character from Andy Griffith-Mayberry however the wolf in sheep's clothing comes to mind.

By CHARLES PILLER Sacramento Bee
April 4, 2009, 12:56AM SACRAMENTO, Calif. — Billionaire investor Warren Buffett has been lauded for his plainspoken denunciation of the greed and foolishness behind the economic crisis. He’s pushed the massive federal bailout of imploding banks as the essential response to an “economic Pearl Harbor.”

When Buffett speaks, people in high places listen. He’s so highly regarded that in a fall debate, both presidential candidates said they’d consider him for Treasury secretary.

A Sacramento Bee examination of regulatory records has found that his extensive holdings in financial firms have made Buffett, the world’s second-wealthiest person behind Microsoft Chairman Bill Gates, one of the top beneficiaries of the banking bailout.

Just 28 companies received more than 90 percent of the funds so far disbursed to financial firms by the $700 billion Troubled Asset Relief Program.

Buffett’s company, Berkshire Hathaway, hasn’t received any of that federal aid, but Berkshire, based in Omaha, Neb., owns stock valued at more than $13 billion in the top recipients of TARP funds, including Goldman Sachs Group, US Bancorp, American Express and Bank of America, which analysts all thought were in deep trouble before TARP was approved in October.

Boon for Berkshire

That total, The Sacramento Bee found, ranks Berkshire fifth among all investors in TARP-assisted companies. Berkshire’s TARP holdings constitute 30 percent of its publicly disclosed stock portfolio, and that proportion reflects at least twice as much dependence on bailed-out banks as any other large investor.

Berkshire, for instance, is the largest shareholder in San Francisco-based Wells Fargo, which got $25 billion — 91 percent of the TARP funds invested in institutions headquartered in California.

Buffett increased his bank holdings in September, while he was arguing in the media that Congress should approve the bailout to prevent the collapse of the global financial system.

“If I didn’t think the government was going to act, I would not be doing anything this week,” Buffett told CNBC after investing $5 billion in Goldman Sachs. “I am, to some extent, betting on the fact that the government will do the rational thing here and act promptly.”

The more the bailout props up these financial companies, the more secure Berkshire’s and other shareholders’ investments in them are. Berkshire shares have risen sharply with the financial sector stock rally in recent weeks, but they’re still down nearly 40 percent since September. In Friday trading, they closed at $92,490 a share.

“People can draw their own conclusions” about Buffett’s stake in the bailout, said Richard Coppes, an expert in business ethics at the international law firm Jones Day, and a former general counsel of the California Public Employees’ Retirement System. “But it shows one reason Buffett is so intensely interested in TARP.”

Buffett, whose company is also the largest investor in Goldman Sachs and American Express, declined to be interviewed. In a February letter to Berkshire shareholders, he said that without government intervention, the consequences for the economy would have been “cataclysmic.”

“Like it or not,” he wrote, “the inhabitants of Wall Street, Main Street and the various Side Streets of America were all in the same boat.”

Question of fairness

Experts agree that preserving a functional banking system, TARP’s goal, benefits everyone. In dispute is whether the bailout was the fairest and best approach.

Some say that large shareholders such as Buffett have been the primary, and perhaps only significant beneficiaries of TARP. Bank stocks have recovered significantly in recent weeks — Goldman’s share price has more than doubled since November — and no TARP bank has failed.

Critics, however, worry that TARP propped up Wall Street against bankruptcy at the expense of taxpayers. The Treasury Department expected TARP to get loans flowing again, but the market has barely thawed, and unemployment has surged.

Thomas M. Hoenig, the president of the Federal Reserve Bank of Kansas City, recently advocated a government takeover of moribund banks until their balance sheets can be cleaned up.

“Shareholders would be forced to bear the full risk of the positions they have taken,” Hoenig said, “and suffer the resulting losses.”

Foreign firms also have gained much from the U.S. bailout. The Sacramento Bee’s examination of federal data found that foreign investment firms hold more than $31 billion in TARP-assisted financial companies. That lends credence to U.S. concerns that some European countries should more forcefully stimulate their own economies.

The Europeans agreed to loans and trade guarantees at the G-20 economic summit last week in London, but not to the stimulus package sought by President Barack Obama.

“It shouldn’t just be the obligation of the U.S. to bail out the global system,” said Richard C. Ferlauto, the governance and pension director for the American Federation of State, County and Municipal Employees, AFL-CIO, whose members’ pension assets total more than $1 trillion. “Each country has to step to the plate proportionately.”

The Sacramento Bee also found that many of the leading TARP recipient companies cross-own large shares of other TARP banks.

Northern Trust received about $1.5 billion in government investments, yet its holdings in other TARP-assisted banks are about four times that amount. State Street got $2 billion, and holds nearly $24 billion in shares of other TARP recipients.

Each company has a stake in at least a dozen California banks, large and small, that received TARP funds.

Those commingled interests are partly responsible for the financial meltdown, Ferlauto said. “Ownership interlocks among these large financial institutions meant that no one was willing to rock the boat,” he said, in the period leading up to the financial meltdown.

“There needs to be a lot more transparency on the part of large financial institutions as to how they act as fiduciaries of other financial companies,” he added. “It’s collusion of ownership.”

To be sure, most of the investments by banks in other banks are investments of private clients managed by the banks. Those clients, however, aren’t disclosed to regulators — another way that some beneficiaries of the bailout are shielded from public scrutiny.

'Reeks of favoritism'

When told of The Sacramento Bee’s findings, Robert Kuttner, the author of a recent best-seller on the economic crisis, said they reveal a bailout program designed out of public view, and one that “reeks of favoritism and special treatment.”

“TARP was designed that way,” Kuttner said, “to concentrate power with almost no effective oversight. That, to me, is the scandal.”

The lack of clear criteria for awarding TARP funds continued after the recent change in government, according to Kuttner and other experts.

“The Obama administration said it would offer transparency and openness. But the single most important thing they are doing is being done largely behind closed doors, and the design is by, for and in the interest of large banks, hedge funds and private equity companies,” he said. “Because there are no explicit criteria, it’s very hard to know if a Citigroup or a Goldman got special treatment.”

The Sacramento Bee’s findings follow a recent controversy over some Buffett holdings that may have contributed to the economic crisis.

Berkshire owns more than 20 percent of Moody’s, a top credit-rating agency, making it by far the largest stakeholder. Moody’s has been faulted for enabling the global crisis by overvaluing mortgage assets.

Although Buffett has been outspoken about the need for government intervention in the crisis caused by the mortgage meltdown, he’s said nothing publicly about the role of a company in which his firm is a minority holder.

Buffett also has decried “credit default swaps” — which are similar to insurance policies, in which mortgage bonds and other financial instruments are insured against default — as “financial weapons of mass destruction.” He criticized the profligate use of these unregulated financial tools, or derivatives, widely blamed as a root of the credit collapse.

Yet Berkshire has issued tens of billions of dollars in derivatives. In a letter to shareholders, Buffett justified derivatives as relatively safe and likely to yield vast profits.

Leading economists, however, said that Berkshire’s credit default swaps are much the same as those that sank American International Group, the insurer at the epicenter of the derivative fiasco.

“I assume that (Buffett) is being more responsible than they were,” said Dean Baker, the co-director of the Center for Economic and Policy Research in Washington. “But this is a difference in quantity, not quality.”

Simon Johnson, a professor at MIT’s Sloan School of Management and the former chief economist for the International Monetary Fund, said that despite the banking collapse, financial leaders such as Buffett have retained surprising control over the government.

“There’s this general presumption that Wall Street knows best. But they may not know best for the taxpayer,” Johnson said. “We’ve gotten into the habit of deferring to them a little too much — including Warren Buffett.”

This report is based, in part, on an evaluation of investor filings to the Securities and Exchange Commission as of Dec. 31, the most comprehensive recent data, and on Treasury Department disclosures of federal stock purchases.

For overall shareholder figures, The Sacramento Bee considered the 28 firms that received at least $600 million from the Troubled Asset Relief Program as of March 24 — comprising about 92 percent of TARP outlays.

TARP-assisted California banks were separately reviewed if their market capitalization was at least $25 million. The figures cited exclude federal investments in American International Group and federal loans and investments for auto companies.

The value of investor holdings in TARP-assisted companies was current as of the market close on March 27. Assistance on ownership analysis was provided by Cary Krosinsky, vice president of the research firm Trucost.

References to Berkshire Hathaway’s total stock portfolio include a $5 billion investment in Goldman Sachs Group. That investment pays a 10 percent annual dividend and includes the right to purchase another $5 billion in Goldman stock.


Thank you Mr. Piller! This is one article for the collection.

Warren Buffett defends Goldman Sachs and Lloyd Blankfein

By SCOTT PATTERSON And ERIK HOLM
Wall Street Journal-April 30, 2010
OMAHA, Neb.— Warren Buffett offered a vigorous defense of Goldman Sachs Group Inc. Saturday, saying the embattled firm hadn't engaged in improper activity and shouldn't be blamed for the losses of its clients.

Goldman has been reeling from Securities and Exchange Commission allegations that the bank had engaged in fraudulent activities in relation to a mortgage deal called Abacus 2007-AC1. Goldman says it did nothing wrong.

Mr. Buffett's comments—which came early in the day at Berkshire Hathaway Inc.'s annual shareholders meeting—offer a powerful vote of confidence in Goldman, which has seen its shares slide since the SEC announced the investigation on April 16. Goldman's stock fell 9.4% on Friday alone after it emerged that the Manhattan district attorney's office was conducting a preliminary criminal probe into its mortgage-trading activities.

"We have had a lot of very satisfactory transactions with Goldman Sachs," Mr. Buffett said.

The billionaire investor said he fully supported Goldman CEO Lloyd Blankfein. Asked if he could choose a successor for Mr. Blankfein, Mr. Buffett said: "If Lloyd had a twin brother I'd go for him."

Mr. Buffett, who invested $5 billion in Goldman at the height of the financial crisis, said he didn't believe that Goldman had acted improperly. Rather, counterparties to the deals, which plunged in value when the housing market fell apart in 2007, should be responsible for their own actions.

Mr. Buffett said he believed that one of the banks that had purchased Abacus deals in the transaction, the Dutch bank ABN Amro Group, was a sophisticated investor. "It's a little hard for me to get terribly sympathetic for a bank that made a bad credit deal," said Mr. Buffett.

He said a firm that had acted as an intermediary in the deal, ACA Management, had drifted from its original business of insuring municipal bonds into structured finance, a more complicated and risky business. He said he believes most press accounts haven't properly explained ACA's business model.

Mr. Buffett also said the fact that Paulson & Co., the New York hedge fund that worked with Goldman and ACA to structure the Abacus deal, was on the other side of the Abacus deal was irrelevant. "It doesn't make any difference whether it was Paulson on the other side of the deal or whether Goldman was on the other side of the deal or whether Berkshire was on the other side of the deal," he said.

Mr. Buffett has also been taking some heat for a push he has made on Capitol Hill for exemptions for several large derivatives deals his firm has made in recent year. A bill before Congress could force Berkshire to post billions in collateral for the deals. In the past, Berkshire hasn't been required to put up much cash—if any—to back its derivatives transactions.

Link to complete article

Ah shucks, isn't Buffett great, as he truly cares about the little guy

and that business is conducted in a fair manner.....

How about the other side of Warren Buffett?

Buffett’s Betrayal by Rolf Winkler
Reuters-Aug 4, 2009 13:54 EDT


A good chunk of his fortune is dependent on taxpayer largess. Were it not for government bailouts, for which Buffett lobbied hard, many of his company’s stock holdings would have been wiped out.


Berkshire Hathaway, in which Buffett owns 27 percent, according to a recent proxy filing, has more than $26 billion invested in eight financial companies that have received bailout money. The TARP at one point had nearly $100 billion invested in these companies and, according to new data released by Thomson Reuters, FDIC backs more than $130 billion of their debt.


To put that in perspective, 75 percent of the debt these companies have issued since late November has come with a federal guarantee.

Without FDIC’s debt guarantee program, even impregnable Goldman would have collapsed.
 
And this excludes the emergency, opaque lending facilities from the Federal Reserve that also helped rescue the big banks. Without all these bailouts, the financial system would have been forced to recapitalize itself.
 
Banks that couldn’t finance their balance sheets would have sold toxic assets at market prices, and the losses would have wiped out their shareholder’s equity. With $7 billion at stake, Buffett is one of the biggest of these shareholders.
 
He even traded the bailout, seeking morally hazardous profits in preferred stock and warrants of Goldman and GE because he had “confidence in Congress to do the right thing” — to rescue shareholders in too-big-to-fail financials from the losses that were rightfully theirs to absorb.
 
And what of Moody’s, the credit-rating agency that enabled lending excesses Buffett criticizes, and in which he’s held a major stake for years? Recently Berkshire cut its stake to 16 percent from 20 percent. Publicly, however, the Oracle of Omaha has been silent.
 
This is remarkably incongruous for the world’s most famous financial straight-shooter. Few have called him on it, though one notable exception was a good article by Charles Piller in the Sacramento Bee earlier this year.
 
Buffett didn’t respond to my email seeking a comment.
Link to complete article


"It's a little hard for me to get terribly sympathetic for a bank that made a bad credit deal," said Mr. Buffett. How sympathetic would you have been Warren if the FDIC was not there to back the debt? Of course you defend Goldman Sachs, you could be his twin!

Sunday Comics

Fitch Downgrades Aflac to A from A+

Consumer Confidence Report released 2-23-10

AIG Chairman Harvey Golub in a letter to shareholders:

"Limits on compensation made no business sense

and hurt the firms ability to repay its bailout".

Ben Bernanke's testimony before the

House Financial Services Committee

Warren Buffett: The national slump in housing should

be over in a year or so.

Barron's Cover Story

THE HOTTEST INITIAL PUBLIC OFFERING of 2010

could be General Motors. That's right. GM.

House Financial Services Committee

“I feel more confident about the state of the nation than I have in

two-and-a-half or three years,” Geithner said

Typical Nancy Pelosi response to a coherent, fiscally prudent and

grandchild focused perspective.