08-22-2008, 07:27 PM
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#2
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Senior Member
Join Date: Aug 2007
Location: Okolona, Ky.
Posts: 6,156
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Buffett shyin' away from Freddie too...
Buffett passes on Freddie investment
August 22, 2008: Moody's downgrades the struggling mortgage finance firm's rating to near junk status.
Quote:
Freddie Mac talked to investors this week about possibly buying its stock to raise much-needed capital but billionaire investor Warren Buffett said he passed on an opportunity to help the troubled mortgage giant. The likelihood Freddie will find willing investors took another hit after Moody's Investors Service lowered the company's preferred stock ratings and those of its sister company Fannie Mae to near junk status. Shares of the government-sponsored enterprises tumbled in midday trading.
Freddie spokesman Douglas Duvall confirmed to The Associated Press Friday that the company's management has been in talks with potential investors this week as part of ongoing discussions to raise capital. He declined to give any details about the meetings, possible investors or structures. The Wall Street Journal reported on the talks Friday. Freddie promised in May to raise $5.5 billion to shore up its finances, but hasn't yet and its declining share price makes raising that money far less feasible. Fannie Mae spokeswoman Amy Bonitatibus declined to comment on whether the company is pursuing similar talks.
Warren Buffett acknowledged during a live appearance on CNBC Friday that he had been approached by Freddie and Fannie and passed on getting involved. The timing of the incident was not immediately clear. Buffett's company Berkshire Hathaway Inc. (BRK.B) was the largest Freddie shareholder around 2000 and 2001, he said. The company sold its shares after Buffett realized that both companies were trying "to report quarterly earnings to please Wall Street."
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Buffett: We're still in a recession
August 22, 2008: Billionaire investor says financial crisis will continue in the near term as credit market continues to drag on financial industry.
Quote:
Billionaire investor Warren Buffett said Friday the economy continues to be in a recession, by his definition, and will continue to be for at least several more months. During a live appearance on CNBC, Buffett said ripples of the credit crunch are continuing to cause problems in financial businesses and the economy. Earlier this year he said a financial crisis reveals which players have been "swimming naked," because the tide goes out. That picture has worsened along with the crisis.
"We found out that Wall Street has been king of a nudist beach," said Buffett, who is chairman and chief executive of Berkshire Hathaway Inc., which is based in Omaha. Buffett said activity at businesses Berkshire owns, especially ones related to housing construction such as Shaw carpet and Acme Brick, continued to slow during the summer. He's confident the nation will be doing better five years from now, Buffett said, but the economy could be worse five months from now.
Buffett said the economy is in a recession because most Americans aren't doing as well today as they used to be. The technical definition of a recession most economists use is two consecutive quarters of negative growth in the nation's gross domestic product. Regarding the nation's credit crunch, Buffett said he believes mortgage giants Fannie Mae and Freddie Mac are too big to fail, but that doesn't mean that all the shareholder equity in those companies can't be wiped out.
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Buffett says unlikely he would bid for Dow Jones
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