Warren Buffett has been in the news lately for demanding higher tax rates for wealthy Americans. He didn’t mention that he’s free to write a check to the Treasury at any time he sees fit, or that he’s already gamed the system so he pays lower rates. He also hasn’t been highlighting the fact that he’s made quite a bit of money by investing in too-big-to-fail financial institutions that the federal government has bailed out. Oh, and he’s profited from his investments in companies favored by the federal government. So it’s only natural to wonder if he’s expecting a bailout of Bank of America.
In this light, and recalling his Goldman-bailout profit, consider Buffett’s investment last week in Bank of America.
Investors had been dumping Bank of America shares, presumably over worries about the mortgages it holds. But B of A holds ugly mortgages mostly because it bought Countrywide in 2008 — a move government officials encouraged because they thought it would stabilize the financial sector. Similarly, B of A bought up Merrill Lynch with some nudging from the Treasury Department.
Finally, the Obama administration is simultaneously siding with struggling mortgage-holders against their banks while also trying to promote more lending. You could say Uncle Sam owes Bank of America.
At least Moody’s, the credit-ratings agency, seems to think so. In a June 2 announcement, Moody’s (owned by Buffett’s Berkshire Hathaway, by the way) wrote that Bank of America’s credit rating “currently incorporates an unusual amount of ‘uplift’ from Moody’s systemic support assumptions that were increased during the financial crisis.” In other words, Moody’s — and thus most creditors — assumes the government will not let Bank of America fail.
By putting $3 billion in B of A, Buffett seems to be following his mantra: “Be fearful when others are greedy, and be greedy when others are fearful.” But does the Oracle of Omaha, as he did in 2008, find his courage in the promise of a bailout? And does he have good reason to expect one?
Read the whole thing, there’s much more, including mention of the fundraiser Buffett will be holding for his pal President Obama.
Update: The New York Post has a related piece:
This one’s truly, uh … rich: Billionaire Warren Buffett says folks like him should have to pay more taxes — but it turns out his firm, Berkshire Hathaway, hasn’t paid what it’s already owed for years.
That’s right: As Americans for Limited Government President Bill Wilson notes, the company openly admits that it owes back taxes since as long ago as 2002.
“We anticipate that we will resolve all adjustments proposed by the US Internal Revenue Service (“IRS”) for the 2002 through 2004 tax years … within the next 12 months,” the firm’s annual report says.
Read the whole thing, not only is Buffett a corrupt corporatist, he’s also a big hypocrite.
Tags: bailouts, Bank of America, moodys, obama, profit, too big to fail, Warren Buffett
Makes sense…
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Another wolf in sheep’s clothing. Sickening.
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When did Crony Capitalism begin? Was it with Hitler, or did he just copy some other dictator? Now we have a dictator engaging in it in this country. We need more G.E.s and Warren Buffets like we need another hurricane. Just think of what George Soros is getting that we don’t even know about. And all with the taxpayers’ money. It is sickening!
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I thought he normally gets tax free municipal bonds – that is not really ‘gaming the system’. BOFA would be a different story, but he has money to burn anyway.
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This dude puts the “c” in crony capitalism. That’s quite a dance that he’s doing with the administration, isn’t it?
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[...] Linked by The Lonely Conservative who has more. Thanks Karen! Aaron Task: Warren Buffet and Bank of America [...]
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Thanks much for the link. Now that we know who Buffet is, maybe he won’t be so adored. I still think Obama had something to do with this. He could not afford to let BOA go down.
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