Buffett/FCIC News Coverage, with Commentary
I've waited awhile to do this. It's been fun watching the commentary, so I thought, why not give blog readers a roundup of media coverage on the FCIC testimony, beginning with the first leak that Buffett would testify. Pls note, the balance here reflects the actual coverage. Media outlets that played it straight, just the facts include Bloomberg BusinessWeek. CNN. WaPo. The FT. Take a look at some of these others that included more interpretation and analysis. I've included bloggers. They had some of the best commentary.
Leak that Buffett would testify, by Carol Loomis. This attempt to guide the commissioners on what questions they should ask did not work.
National Public Radio's "Marketplace" casts a wry note on the coming testimony by Buffett, who "is generally not opposed to being in the public eye." Afterward, its take on the two Warren Buffetts.
Forbes' Bob Lenzner's perspective, which focuses on insights to be gleaned from Buffett's testimony.
New York Observer: the philosophical take. Historical choice between "voice" and "vote" (with your feet).
NYT Dealbook defends Buffett.
ABC News catches Angelides after the hearing. Angelides says not sure Buffett "fully comprehends the range of questions raised about Moody's business practices and culture."
CBS News gets to the heart of it: rating agencies are pointless.
McClatchey papers focus on the email that warned Buffett that ratings were time bombs (Buffett denies being warned).
MarketWatch defends Buffett for only being himself.
United Press International Former Moody's employees less forgiving of Moody's than Buffett, McDaniel.
Ukrainian Globalist quotes Buffett in reverse translation: “All Americans believed absolutely that housing prices sharply fall can not”
The Guardian: "excruciating."
Disillusioned Buffett fan wants to carve own eye out with soup spoon.
Wall Street Journal says Buffett "walked a fine line," distanced himself from Moody's fairly successfully.
NYMag on the entertainment value of watching master comedian Angiledes riposte with king-of-the-sound-bites Buffett.
ZeroHedge's Tyler Durden: never the voice of moderation but, as always, thought-provoking and entertaining. By the way, his website has some good information on how to get around corporate censorware.
This guy can write.
Felix Salmon of Reuters: "PR disaster." "Arguably the single worst day of Buffett's life" from a PR standpoint.
Omaha World-Herald wonders why Buffett faced the tedium of testifying in person when he was able to testify to a different investigation about AIG by phone from Omaha. Finds it "not unusual" that Buffett, CEO of Moody's biggest shareholder, says he does not know how Moody's works & wouldn't recognize Ray McDaniel. That's just how big investors behave.
Blogger rips testimony as "nothingburger"
Ravi Nagarajan on the Angiledes/Schwarzeneggar connection. Angelides also was California State Treasurer under Schwarzeneggar. Either way it is a sea change that an ambitious politician of any stripe can make political points by slapping around Warren Buffett instead of trying to ride his coattails.
Somebody in Taiwan is not happy.
Buffett's views cited here as one of reasons to buy MCO.
Mark Skousen caught up with Buffett at Sing-Sing and asked him directly which stock to buy. His answer: Goldman Sachs, now at 6x earnings and 30% profit margins. I leave it to you, dear blog readers, to debate whether Buffett is talking his book or not, given these #s.
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Perhaps the truth is...
That Warren didn't see a housing bubble as it was developing is hard to believe. The excesses were simply too pronounced. He must have seen it. Indeed, Alice, you've said on your Facebook page that Warren did see overpricing in residential real estate well before the bubble burst, to such an extent that he actually advised you to sell your home pending a (presumably dramatic) fall in prices. So instead of holding up a copy of The Economist, the FCIC should have confronted Warren with your Facebook commentary, and then asked him to reconcile his testimony that he never saw a housing bubble with the advice he purportedly gave you.
Perhaps the truth is that he did see a housing bubble, but he didn't foresee the collateral effects. Had he known how deeply the bursting of the bubble would impact the economy and the securities markets, presumably he would have sold his stock in Moody's long before the punch bowl was knocked over. In this respect, plainly he was taken by surprise.
The FCIC could have more profitably used its time with Warren by eliciting his testimony on the best way, going forward, to maximize home ownership while minimizing mortgage defaults. At least that would have had some utility. (I didn't see the whole thing; perhaps they did spend time on this line of inquiry.) Lining him up with a bunch of Moody's executives, implying that as a passive shareholder, he somehow should be answerable for Moody's excesses, was sophomoric -- a silly attempt to generate mock indignation. It contributed nothing except to undermine the FCIC's credibility as a serious body.
One can imagine that if Warren bought a stake in McDonald's, some future commission might subpoena him to testify on the matter of public health.
"Were you aware, Mr. Buffett, that McDonald's senior management ordered an adjustment to the ingredients of the Big Mac, which effectively doubled its impact on the cholesterol of the typical consumer? Did you consider the health impact of this on McDonald's customers as a criterion of your investment, and if so, didn't you feel an obligation to discuss the matter with McDonald's senior management? Wasn't it your duty to do so?"
"If we can't count on large corporate shareholders like you, Mr. Buffett, to monitor and investigate the nutritional content of the menus that ordinary Americans order from, who can we count on?"
I watched the testimony. Two
I watched the testimony. Two comments:
1) Mr. Buffett seemed rather more tentative.
2) When one of the questioners quoted Buffett's "a lifetime to build a reputation and overnight to destroy it" statement, then offered "a man's reputation is measured by the size of his balance sheet", Buffett laughed and said he would gladly accept that definition.
I found that odd, but given Buffett's defense of his Goldman position, his tap dancing around BH's Moody's investment and CDO holdings, perhaps more honest than what he has been saying but not doing for decades.
"When one of the questioners
"When one of the questioners quoted Buffett's "a lifetime to build a reputation and overnight to destroy it" statement, then offered "a man's reputation is measured by the size of his balance sheet", Buffett laughed and said he would gladly accept that definition."
Now this was an obvious joke ... obviously he doesn't believe that.
But I agree that he was uncomfortable being there but I can't blame him. The FCIC is not really about getting to the bottom of the past crisis and coming up with solutions. If it was about solutions, then why is Congress finalizing "financial regulatory reform" months before the panel is due to report (safely after the elections, I might add).
I thought he should have been harder on Moody's management. They presided over a huge destruction of shareholder value and this impacted all Berkshire shareholders, none more so that Mr. Buffett. I don't see why Moody's CEO should be treated less severely than the CEO of a major financial institution who screwed up.
Skousen article - GS comment
After reading the Skousen article, it appears that the GS recommendation came from Skousen, not Buffett.
I didn't see anything in the article that says Skousen asked Buffett which stock to buy. Here's the relevant piece:
"If you want to buy a value stock that Buffett currently favors, buy Goldman Sachs (NYSE: GS). It’s selling for only six times earnings and has profit margins exceeding 30%."
I read that to mean that the GS rec is from Skousen (all the direct quotes from Buffett are in italicized quotes, while the above statement was not). He assumes Buffett "currently favors" it because Buffett's GS investment is widely known.
I can appreciate that you're unhappy with Warren, but I think you're taking it too far.
Skousen
hmmm. interesting. I read him literally ("currently" favors). You would only see those words in something written by me if I had asked the question on the spot. Nobody should assume that Warren would recommend buying a stock at a particular price simply because he owns it. But I think you are right, or, put another way, it's Skousen who's talking his book. (I'm not really sure Warren even cares all that much about GS stock price; he owns the debt. Warrants will pay off eventually).
On your larger point, anytime Buffett says to buy a stock and mentions metrics, people should pay attention and discuss it, so I'm going to happily point it out. This time, though, the metrics came from Skousen.
Skousen
It's great to see you to clarify this point. Internet is wonderful.
Internet
Isn't it, though. Unbelievable.
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