Buffet makes $154 million from Obama's $25 billion mortgage plan

Discussion in 'Politics' started by healthmyths, Feb 10, 2012.

  1. healthmyths
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    healthmyths Gold Member Supporting Member

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    Warren Buffett’s stake in Bank of America Corp. increased in value by $154 million after President Obama and the U.S. Justice Department announced a $25 billion foreclosure abuse settlement with the five largest U.S. banks Thursday, records show.

    Buffett invested $5 billion in Bank of America (BofA) on Aug. 25, 2011. As part of his investment deal, Buffett gained warrants that allow him to buy 700 million shares of Bank of America stock at a strike price of $7.14 a share.
    Buffett’s Bank of America | Washington Free Beacon


    ANY WONDER Obama quotes Buffett!!!!
     
  2. healthmyths
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    healthmyths Gold Member Supporting Member

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    So Buffett 700 million shares in BofA has increased from 8/25/11 to today by $665 million in part
    of Obama's $25 billion foreclosure closing price today $8.09!
     
  3. Political Junky
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    Political Junky Gold Member

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    Damn, Buffett is one smart businessman.
     
  4. Oddball
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    Oddball BANNED Supporting Member

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    Fixed.
     
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  5. California Girl
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    California Girl BANNED

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    He certainly is. He bought the White House. I wish I'd thought of that.
     
  6. g5000
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    g5000 Diamond Member

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    I can give you some backstory if you are interested.

    This is not the first time Buffett invested several billion dollars in a financial company in return for warrants which later gave him a huge return. The reason Buffet had these Bank of American warrants in the first place is because this strategy has worked for him before.

    In 2008, when the five biggest Wall Street firms were all on the verge of plunging into the abyss (two already had), Warren Buffet agreed to invest $5 billion in Goldman Sachs. This had the immediate effect of calming the waters and stopping what had become a run on Goldman and JP Morgan and Morgan Stanley. Buffett was given warrants at a very low strike price then, too. And they paid off handsomely later. Which is why he did it in the first place.

    He did the same thing with General Electric's financial company a month later.

    He did an identical deal with another financial company farther back in the past, but which one slips my mind at the moment.

    But in every case, the bank in question was about to go under and they reached out to Buffett because when panicked investors see the prestige name of "Buffett" coming to the rescue, they always calm down and stop the run on the bank.

    Last year, Bank of America was rumored to be on the verge of collapse because of the number of pending lawsuits against BofA for fraud committed by Merrill Lynch which BofA had purchased during the meltdown. And the bulk of the lawsuits were being brought by various government agencies.

    Because of this, there was a slow motion run on BofA last year. Just rewind and look at their stock price. It dropped something like 70 percent last year, which created a kind of self-fulfilling prophecy.

    So BofA yanked out the old Buffett template and gave him a call.

    When a bank is on the verge of imploding, they are desperate, and they offer very favorable terms to any white knight who has the firepower to save them.

    Now that the government agencies that were suing BofA have reached an agreement with the bank, the survivability of BofA is no longer in question. And so the bank's stock naturally jumps.

    And that is how Buffett makes money.

    He actually got better terms from Goldman Sachs and GE than he did from BofA, but what's a few hundred million bucks between friends?
     
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    Last edited: Feb 10, 2012
  7. Truthseeker420
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    Truthseeker420 Gold Member

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    Class Warfare ! Class Warfare! :lol:
     
  8. Trajan
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    Trajan conscientia mille testes

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    I am behind in my reading, so I just got enough time on the potty to read this, Buffett has done quite well since day one of this downturn, bush obama whomever......ole warren is a friggin fraud;


    free article....have a gander-



    Warren Buffett: Baptist and Bootlegger

    How America’s favorite billionaire plays politics to make money

    snip-

    Buffett the Bootlegger

    But this image does not always reflect reality. Warren Buffett is very much a political entrepreneur; his best investments are often in political relationships. In recent years, Buffett has used taxpayer money as a vehicle to even greater profit and wealth. Indeed, the success of some of his biggest bets and the profitability of some of his largest investments rely on government largesse and “coddling” with taxpayer money.

    During the financial crisis in the fall of 2008, Buffett became an important symbol on television. He filled the role of fiscal adult, a responsible father figure in the midst of irresponsible Wall Street speculators. While pushing for calm and advocating specific market interventions in both public and private, however, he was also investing (sometimes quietly) so he could profit once his policy advice was implemented. This put Buffett in the position of being both Baptist and bootlegger, praised for his moral character while shaking his finger all the way to the bank.

    In the summer of 2008, when several investment houses and the government-sponsored mortgage companies Fannie Mae and Freddie Mac teetered on the brink of financial collapse, Buffett was “uncharacteristically quiet,” as the London Guardian observed. It was only on September 23 that he became a highly visible player in the drama, investing $5 billion in Goldman Sachs, which was overleveraged and short on cash. Buffett’s play gave the investment bank a much-needed cash infusion, making a heck of a deal for himself in return: Berkshire Hathaway received preferred stock with a 10 percent dividend yield and an attractive option to buy another $5 billion in stock at $115 a share.

    Wall Street was on fire, and Buffett was running toward the flames. But he was doing so with the expectation that the fire department (that is, the federal government) was right behind him with buckets of bailout money. As he admitted on CNBC at the time, “If I didn’t think the government was going to act, I wouldn’t be doing anything this week.”

    Buffett needed the bailout. In addition to Goldman Sachs, which was not as badly leveraged as some of its competitors, Buffett was heavily invested in several other banks, such as Wells Fargo and U.S. Bancorp, that were also at risk and in need of federal cash.

    the rest-

    Warren Buffett: Baptist and Bootlegger - Reason Magazine
     
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  9. Mr Clean
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    Mr Clean Gold Member

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    You people got a problem with capitalism now?
     
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  10. g5000
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    g5000 Diamond Member

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    Knowing how the government will behave, based on the government's behavior in the past, and then acting on that knowledge is not evidence of collusion with the government. It is evidence of savviness and having the resources to exploit it.
     

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