Warren Buffett Bolsters Financial Markets

[Valerie]

Buffett's Berkshire invests $5B in Goldman
In addition to the Oracle of Omaha's Berkshire's stake, Goldman said it is raising $2.5 billion through a sale of common stock.
By Tami Luhby, CNNMoney.com senior writer
Last Updated: September 23, 2008: 8:57 PM ET

NEW YORK (CNNMoney.com) -- In its first big move to raise capital, Goldman Sachs Group announced Tuesday that it will receive a $5 billion infusion from Warren Buffett's Berkshire Hathaway, an investment that could also raise confidence in the venerable Wall Street firm.

Warren Buffett invests $5B in Goldman Sachs - Sep. 23, 2008

 

[Valerie]

Buffett's Berkshire invests $5B in Goldman
In addition to the Oracle of Omaha's Berkshire's stake, Goldman said it is raising $2.5 billion through a sale of common stock.
By Tami Luhby, CNNMoney.com senior writer
Last Updated: September 23, 2008: 8:57 PM ET

NEW YORK (CNNMoney.com) -- In its first big move to raise capital, Goldman Sachs Group announced Tuesday that it will receive a $5 billion infusion from Warren Buffett's Berkshire Hathaway, an investment that could also raise confidence in the venerable Wall Street firm.

Warren Buffett invests $5B in Goldman Sachs - Sep. 23, 2008

Warren Buffett to the rescue: His Berkshire Hathaway Inc. agreed today to invest $5 billion in Goldman Sachs Group via a purchase of preferred stock.

Berkshire also will get warrants to buy up to $5 billion of Goldman common shares.

The deal, announced after markets closed, amounts to a huge vote of confidence by Buffett in the investment banking titan, at a time when investors remain spooked about the future of Wall Street.

Buffett boosts Goldman Sachs with $5-billion investment | Money & Company | Los Angeles Times

After the harrowing turmoil in the financial system last week, the Federal Reserve late Sunday announced that it had granted bank holding company status to Goldman and Morgan Stanley -- a move that essentially ended the era of the giant standalone investment bank.

The change means the companies intend to seek more stability for their businesses by relying more heavily on consumer and business bank deposits to fund themselves, instead of the capital markets. Dependence on the capital markets is what sank rival investment banks Bear Stearns Cos. and Lehman Bros. this year as the credit crisis deepened. And in what was viewed as a desperation move, Merrill Lynch & Co. just a week ago agreed to a rushed merger with Bank of America Corp.

For Goldman and Morgan, the price for bank-like stability will be tighter federal regulation -- and far less profit potential than they had enjoyed as independent investment banks, including the ability to lever their investment bets by using extremely high levels of borrowed money.

 

[Valerie]

Buffett injects $10bn into Goldman Sachs

By Stephen Foley in New York
Wednesday, 24 September 2008

Warren Buffett, the billionaire investor who foresaw the credit crisis, is investing up to $10bn in the US banking giant Goldman Sachs, in what is interpreted as a powerful signal that he sees long-term value in some battered financial companies.

Goldman said last night that Mr Buffett's investment vehicle, Berkshire Hathaway, would immediately buy $5bn (£2.7bn) of preferred stock and obtain warrants to buy $5bn in common shares over the next five years.

The bank is also raising a further $2.5bn in common stock to restructure a balance sheet that shareholders, creditors and regulators have all told it must be made significantly less risky.

Having $7.5bn more in liquid funds will immediately reduce Goldman's leverage, which is the ratio of its potential liabilities to its underlying assets. Sky-high leverage made investment banks unstable, leading to the collapse of Bear Stearns and Lehman Brothers, and threatened to sink the last two remaining standalone investment banks at the height of last week's panic.

As a result, on Monday, Goldman converted from an investment bank to a traditional bank holding company, bringing it under the formal purview of the US Federal Reserve, which insists on much lower leverage among the banks that it regulates. The change could dramatically change the culture of Goldman, a 139-year-old institution which in recent years has become the most powerful force in high-octane trading, yielding multi-billion dollar bonuses for its stars and record profits for shareholders.

It has been spared the worst of the write-downs on disastrous mortgage investments, which it largely shunned before the credit crisis struck, but still faced a near-death experience last week when bond market investors and share traders concluded that it could not survive in its existing form.

Buffett injects $10bn into Goldman Sachs - Business News, Business - The Independent

 

[Valerie]

Buffett effect is not rocket science
Glenda Korporaal | September 24, 2008

ONE of the most eagerly awaited business books of the year, The Snowball, about legendary US billionaire Warren Buffett, which is set to hit bookstands in coming weeks, may have even more significance in the wake of the turmoil gripping world financial markets.

Buffett's value-driven approach to investing and his more principled and very un-Wall Street approach to morality in doing business is back in vogue again as governments and regulators seek to find their way through the crisis.

Buffett is now officially part of Barack Obama's circle of financial and economic advisers. But he was also nominated this week by Republican presidential candidate Senator John McCain as someone who could head up whatever institution is put in charge of the US Treasury bailout of the distressed mortgage market.

Even Texas oilman T. Boone Pickens had put forward Buffett's name for the job overseeing any Resolution Trust type agency to help manage the disposal of sub-prime mortgages.

"If you could get Warren Buffett to manage the assets, I guarantee we the people would come out of this making some money," Pickens has told the National Press Club in Washington.

The ideas of the 77-year-old Buffett, who vies with his great friend Bill Gates for the title of America's richest man with a fortune of some $US40 billion, are not rocket science. They are all about buying well-managed companies, with ethical and highly committed management teams, not looking for quick profits but rather to run their companies for the longer term.

He has constantly berated what he sees as obscene salaries on Wall Street, anything that smacks of getting too rich too quick and warned against over-leveraged investments and complex, all-too-smart financial instruments that have been at the core of the current financial crisis.

Buffett was warning against junk bonds in the 1980s and, in the 2002 annual report of his company, Berkshire Hathaway, was describing derivatives as the "financial equivalent of weapons of mass destruction".

Thousands of investors from around the world flock to his annual meeting in his home town of Omaha each year to listen to his words of wisdom, having already read his thoughts in his latest annual report.

As the US Government deals with one of the biggest financial crises since the Depression, it is apparent that we are set for a new era of financial regulation as Washington extracts some pros from the quids it is pumping into the system to pay for the sins of the Wall Street high-flyers.

And, whoever wins Government in the November presidential elections, Buffett's thoughts on the financial system may well shape some of the regulatory response to the current crisis.

Buffett effect is not rocket science | The Australian

 

[Valerie]

Buffett: I Support the Bailout Plan
Tuesday, September 23, 2008 4:02 PM

Billionaire Warren Buffett told CNBC that he wholeheartedly supports Treasury Secretary Henry Paulson's planned bailout of Wall Street by backstopping the banks holding failed mortgages.

"It's what I would do if I were there," he told the network in an interview over the weekend.

That sentiment was echoed by Federal Reserve Chairman Ben Bernanke, who told Congress on Tuesday that anything short of Paulson's bailout plan would invite certain recession.

"The financial markets are in quite fragile condition, and I think absent a plan they will get worse," Bernanke said.

MoneyNews - Buffett: I Support the Bailout Plan

 

[Dr Grump]

Are you fucking Buffett or something??

 

[Valerie]

Are you fucking Buffett or something??

You want I should give him your number?

 

[Dr Grump]

You want I should give him your number?

Please do, along with $10-$20 million if you like!

 

[Valerie]

Are you fucking Buffett or something??

Isn't it nice I put all of the important articles conveniently in one place for you?

 

[Dr Grump]

Isn't it nice I put all of the important articles conveniently in one place for you?

Why thank you. Very kind...