Posted on 10/03/2013 7:52:47 PM PDT by Tailgunner Joe
History will judge the Troubled Asset Relief Program more positively than people do now, Warren Buffett said on CNBC Thursday—five years to the day since the financial bailout program was signed into law, and in the midst of the first government shutdown in 17 years.
Appearing alongside former Treasury Secretary Hank Paulson on CNBC's "Squawk Box," Buffett first addressed TARP—saying people don't realize how tough a position Paulson was in when he crafted the rescue package.
The chairman and CEO of Berkshire Hathaway said the bailout was vital at the time in order to shore up the credibility of the banking system. "Belief creates its own reality," Buffett said. "If people think the banking system is unsound, it is unsound, because no bank can pay out all of its liabilities at the same time."
The interviews were conducted a day after chief executives from major financial institutions met with President Barack Obama, and warned of adverse consequences if government agencies remain closed, and if lawmakers failed to raise the U.S. debt ceiling by mid-October.
Later in the day, the president spoke to CNBC—saying he's genuinely worried about what is going on in Washington and exasperated that Republicans are trying use to the shutdown and the borrowing limit fight as leverage to delay Obamacare.
"If [Republicans] can't get their way on another issue, they'll use the threat of, in effect, defaulting on the government's credit to get their way," Buffett said. "That won't work long-term."
"The public will turn on them, and they'll all of a sudden have a counter revelation," he predicted—adding that Washington "will go right up to the point of extreme idiocy" but won't cross it.
Buffett did provide a glimmer of hope if the Oct. 17 debt limit deadline is breached. "If it goes one second beyond the debt limit, that will not do us in. If it goes a year beyond that would be unbelievable."
"These guys may threaten to take their mother hostage, but they will never hurt their mother," joked Paulson, who's also a former chairman and CEO of Goldman Sachs.
Buffett played a crucial role in providing capital during the depths of the 2008 financial crisis, and rescuing Paulson's old firm. Berkshire's $5 billion lifeline to Goldman Sachs at the time has proved quite lucrative today. Berkshire has now exercised warrants acquired as part of the original deal—netting more than $2 billion in Goldman stock.
In addition to the warrants, that Berkshire-infusion had called for the investment bank to provide Berkshire with $5 billion in preferred stock, which paid annual dividends of $500 million. Three years later, Goldman repurchased those preferred shares from Buffett at a premium.
liberal hack
evil old coot
Yep, Mr. Buffett cleaned up on his GS bet, made a ton of money on that bailout, and that was probably instrumental in allowing him to complete his purchase of Burlington Northern. And he gets to squawk into the ear of Deal Leader not to build any pipelines so he can transport all that oil with his tank cars. Mr. Buffett, I am sure you are looking out for us. Now STFU.
Buffett has made a LOT of money rubbing elbows with the Washington establishment while playing the country bumpkin the whole time. I take what he says with a grain of salt.
And people wonder how Detroit got into the shape its in.
What about cash for clunkers, Warren?
Are Buffett and Paulson trying to clean up and smooth things over after Broncobama had a tantrum and started screaming fire! fire! to the world markets?
I can’t believe Obama did that.
Well Warren, you helped put the Idiot in Chief in place, so tell us who is really to blame.
Hey Warren! Have you paid that BILLION DOLLARS in taxes that the IRS says you owe, or is that still in court?
The crony ain’t getting no cronies.
He was apparently asleep in the 90s when the shutdown led to spending cuts that balanced the budget and welfare reform, and also set the stage for tax cuts on capital gains later on. The GOP used their power of the purse to force Clinton to accept some of their ideas, and also created an environment where he knew he had to compromise later. Obama is too much of a child to ever learn this.
Buffet’s just another corporate welfare queen. We need real businessmen who are producers.
Unlike many of us, domestic economic terrorist Warren Buffet is largely unaffected by what comes out of the District of Criminals.
My hope is that he is hit by a truck while crossing the street in downtown Omaha.
The guy who thinks that he’s not paying enough in taxes is going to lecture ME about “extreme idiocy”??
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.