When Warren Buffet put $5 billion in Berkshire Hathaway funds into Goldman Sachs the week after Lehman failed, amidst total turmoil and panic, it appeared from the outside a high risk bet. Buffet had long tried to portray himself as a folksy engine of traditional stability, investing only in things he could understand, so jumping into a wholesale run of chained liabilities may have seemed more than slightly out of character. Some of that was explained later via Buffet’s apparent hands on TARP, particularly version 1, but also later investments in Wells Fargo and US Bancorp.
I have no particular issue with Buffet making those investments, only the pretense of intentional mysticism that surrounds them. The reason the criticism of crony-capitalism sticks is because this was not Buffet’s first intervention to “save” a famed institution on Wall Street. If Buffet’s convention is to stick with “things you know” then he has been right there through the whole of the full-scale wholesale/eurodollar revolution.
On August 21, 1991, Calpers announced that it was cutting ties with Salomon Brothers, explicit in its condemnation, saying it was “outraged and disappointed” that the investment house would knowingly try to circumvent securities rules. There was a Congressional investigation