Buffett doesn't see CDS market collapsing

NF Reporter · 05-03-2008, 11:12 PM

Reuters - Warren Buffett said on Saturday he does not expect the credit default swap market to collapse, and possibly throw financial markets worldwide into chaos.

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waltky · 05-03-2008, 11:49 PM

Warren optimistic...

Warren Buffet: Global credit crisis ebbing for Wall Street
Sunday, May 4, 2008 - Warren Buffett, chief executive officer of Berkshire Hathaway Inc., said the global credit crunch has eased for bankers and the Federal Reserve probably averted more failures by helping to rescue Bear Stearns Cos.

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"The worst of the crisis in Wall Street is over," Buffett said Saturday on Bloomberg Television. "In terms of people with individual mortgages, there's a lot of pain left to come." Buffett was interviewed before the Omaha, Nebraska-based company's annual meeting, attended by about 31,000 people.

Buffett, the world's richest man according to Forbes magazine, said the Fed acted properly when it arranged a US$2.4 billion bailout in March of New York-based Bear Stearns by JPMorgan Chase & Co. The billionaire said he turned down the opportunity because he lacked enough capital and time to grasp the situation. More failures and wider panic may have resulted if the regulators didn't halt the run on Bear Stearns, he said.

"The worry was that there would be contagion; it was a very real worry," Buffett said. "If Bear Stearns had gone, the next day, somebody else would have gone. It could've been a very, very, very chaotic situation." Buffett said he was contacted in March before JPMorgan, the third-biggest U.S. bank by assets, agreed to buy Bear Stearns. The person calling him, whom he wouldn't identify, was "someone responsible" and wasn't from the Federal Reserve or the Treasury. The call lasted about half an hour, Buffett said.

"As I understand it, Bear Stearns had US$65 billion due on Monday and I didn't have US$65 billion," Buffett said. "I couldn't get my mind around that situation in the required time." New York-based JPMorgan was the right buyer for Bear Stearns, he added.

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waltky · 10-03-2008, 04:41 AM

Good Ol' Warren tellin' us how to fix the economy...

Buffett: My fix for the economy
October 2, 2008: Investment guru proposes getting private investors involved in the mortgage bailout and warns that the $700 billion price tag may be too low.

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Warren Buffett suggested Thursday that the U.S. Treasury team with private investors to buy the distressed mortgage assets at the center of the controversial $700 billion Wall Street bailout, and said the price tag of the rescue plan may have to rise. Buffett, the chairman and CEO of Berkshire Hathaway (BRK.A), called the problems facing world markets "unprecedented" and warned of a "disaster" if Congress does not move faster to shore up the economy.

"We had an economic Pearl Harbor hit," he said during an appearance at FORTUNE's Most Powerful Women Summit in Carlsbad, Calif. "For a couple of weeks we've been arguing about who's at fault [and] fooling around while things have gotten a lot worse." On Wednesday, the Senate passed a $700 billion bailout package. The House is expected to vote soon on the revised bill after rejecting an earlier version Monday. Buffett said the bill isn't perfect, but it's a crucial step in the right direction. He then warned it will take a while to work and that the economy is going to struggle even with its passage.

"It will cost more to solve this problem today than it did two weeks ago," said Buffett, referring to when Treasury Secretary Henry Paulson's first proposed that Congress help rescue Wall Street after Lehman Brothers went bankrupt, Merrill Lynch was sold to Bank of America, and American International Group had to be rescued. "If we don't get it solved next week," added Buffett, "I may go back to delivering papers."

Treasury to get paid first