Warren Buffett, TARP, Big Banks: Warren Buffett, the Chairman and CEO of Berkshire Hathaway, talked with CNBC's "Squawk Box" on the 5-year anniversary of the Troubled Asset Relief Program (TARP), together with former Treasury Secretary Hank Paulson. Amid the shutdown of the U.S. government, Buffett said that TARP was a success and that history will appreciate the move more positively than it is viewed now.
Buffett also considers that the bailout was crucially important at that time, one of the main reasons being the necessity to restore the credibility of the banking system: "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," Buffett said.
Also, the CEO of Berkshire Hathaway said that U.S. banks are not too big to be managed, and even though big financial companies might encounter "more surprises" than smaller ones, they also have the capability to handle different situations. As an example he provided Freddie and Fannie, which in Buffett's words: "where not to big do be managed, but where too big to be managed in the way they were managed." At the same time, Buffett emphasized that U.S. banks are not that big, in comparison with those from other countries, like France, or Canada, where banks held a much higher percentage of the GDP.
During the last financial crisis from 2008, Buffett played a major role, especially in relation to rescuing Goldman Sachs Group, Inc. (NYSE:GS), the CEO of which was Buffett's interview colleague, Hank Paulson. Berkshire offered a $5 billion lifeline to Goldman Sachs and has exercised warrants, purchased in the frame of the deal, which net for some $2 billion in Goldman stock, CNBC said. Berkshire also got $5 billion in preferred stock that offered it dividends worth $500 million per year, which were later repurchased by Goldman at a premium.
George Soros’ Thoughts on ‘The Future of Europe’Bill Ackman Reduces Herbalife Short by 40%, Replaces It With Long-Term Put OptionsPershing Square 2013 Q3 Investor Letter
Stan Druckenmiller looks across the table at Charlie Rose, bemused. Rose’s questions are doing that long-tail staccato thing they do when Rose is visibly tired: the questions can’t stop themselves...... (read more)
Paul Singer goes activist on Riverbed Technology, Inc. (NASDAQ:RVBD). In a recent filing with the Securities and Exchange Commission, Elliott Management has announced that it has forwarded the board...... (read more)
Ken Griffin and Citadel Investment Group are betting big on Finisar Corporation (NASDAQ:FNSR). Griffin started building the position in the third quarter of 2013. According to their latest 13F filing...... (read more)
Once per quarter hedge funds disclose their long stock positions in major U.S. publicly traded companies. Historically, the most popular small-cap stocks among hedge funds have outperformed the market...... (read more)
Billionaire Carl Icahn has reported, in a newly amended filing, increasing its position in voice solutions software company Nuance Communications Inc. (NASDAQ:NUAN). The billionaire disclosed holding...... (read more)
Steven Cohen and SAC Capital have raised their position in The Fresh Market Inc (NASDAQ:TFM). According to a new filing, Mr. Cohen owns over 2.4 million shares of the company, which represent 5.1%...... (read more)
Hedge fund advisor Steven Drobny, the author of global macro books "Inside The House of Money" and "The Invisible Hands", is coming out with another book called "The New House of Money." Drobny has just...... (read more)
Edward S. Lampert and his fund ESL Investments have cut their position in Sears Holdings Corp (NASDAQ:SHLD). A newly amended filing with the SEC revealed ESL holding around 51.6 million shares of the...... (read more)
Sam Isaly’s Orbimed Advisors disclosed holding a 33.5% stake in Relypsa Inc (NASDAQ:RLYP), a company which recently conducted its Initial Public Offering. The fund reported, in a new filing, owning...... (read more)
After a rocky start to the month, Barry Rosenstein's Jana Partners, the activist and event-driven hedge fund managed by the New York–based investment firm of the same name, gained a modest 1 percent...... (read more)