Did Buffett's "complete trust" in Goldman cause a misstep?

Discussion in 'Wall St. News' started by wilburbear, Sep 28, 2008.

  1. BusinessWeek 9/23 reports:

    Buffett agreed to shell out an initial $4.5 billion for a 60% stake in Marmon that is expected to grow over time. But Berkshire Hathaway (BRKA), Buffett's investment company, did have to use Goldman to do some of the heavy lifting to finalize the deal. And the outfit did such a good job of it that in his annual letter to shareholders last year Buffett singled out a banker there, Byron Trott, as "the rare investment banker who puts himself in his client's shoes." Buffett added that he and his partner at Berkshire, Charlie Munger, "trust him completely."

    Today, the NY Times reports Goldman had up to $20 billion in AIG risk. Goldman said it had hedges, but I believe clarity is needed. For instance, were these bearish hedges intended solely for its $20 billion AIG exposure, or were the bearish hedges at any other time applied to hedge the downside of some other instrument?

  2. mokwit


    "We're fully hedged" is ALWAYS a LIE. LEH tried to insinuate it was hedged. My guess is the urgency with the bailout is because GS's hedges (if they ever existed) are expiring and the cost of rolling is prohibitive.

    NEW YORK, Sept 28 (Reuters) - Goldman Sachs Group Inc (GS.N: Quote, Profile, Research, Stock Buzz) had as much as $20 billion at risk had the insurer American International Group Inc (AIG.N: Quote, Profile, Research, Stock Buzz) collapsed, the New York Times said on Sunday.

    Goldman was AIG's largest trading partner, the newspaper said, citing six people close to the insurer. A collapse of AIG threatened to leave a hole of as much as $20 billion in Goldman, the newspaper said, citing several of the people.


    David Viniar, Goldman's chief financial officer, told analysts on Sept. 16, hours before the bailout was announced, that Goldman's exposure to AIG was immaterial.

    So now its confirrmed, Paulsons/Bernanke's bailout strategy is directly linked to Goldman and others exposure. Government by the corporations for the corporations. About time Americand took their country back and had some Cuban style trials in the Superbowl.

  3. old news.

    Notice the SEC implemented the Ban on short selling the DAY GS dropped below 100.

    A mighty scam being hoisted under the very noses of those put in charge to look after the publics interest. ie the F'n congress and the white house.
  4. mokwit


    Yeah I know. That's all its ever been about.
  5. I don't think Hank Greenberg and Buffett have ever gotten along well together. But, they may have nothing to do with the claimed GS-AIG hedges.
  6. See link below. Goldman ridiculed Buffett in 2007. Maybe Goldman got the best of Buffett, with their now-claimed $20 billion of AIG risk, plus non-passage of the Wall Street bailout.

    He'll probably come out on top again. But with some individual derivatives contracts to complex to understand, how does a 78 year old man complete due diligence on the whole firm over the weekend?

  7. Did Buffett's "complete trust" in Goldman cause a misstep?

    CNBC is a network for children.

    Warren Buffet is MR. STOCKY.

    Bill Gross is MR. BONDY.

    When the truth be told both have UNNATURAL AFFECTIONS for UNCLE SAM and what is in UNCLE SAM's pants, of course I mean UNCLE SAM's unbelievably HUGE wallet.
  8. AAA30


    10% preferreds with a 10% premium to cancel plus warrents for $5billion @ $115 if things works out. Don't don't think Buffet is too worried. :D
  9. Maybe Buffett will sue GS for misrepresenting some of its overleveraged assets.
    #10     Nov 10, 2008