Why is Warren Buffett Trying to Block Regulation Reform?

Discussion in 'Wall St. News' started by hoffmanw, Apr 28, 2010.

  1. hoffmanw


    Why is Warren Buffett Trying to Block Regulation Reform?

    Posted Apr 28, 2010 11:26am EDT by Henry Blodget

    A mini-scandal broke out in recent days when the world learned that Warren Buffett's Berkshire Hathaway has been lobbying to block one aspect of proposed financial reform -- the rules pertaining to existing derivative contracts.

    The original proposed reform would require companies to put up collateral not only for derivatives they buy in the future, but for existing contracts they already own. This would force a company like Berkshire Hathaway to put billions of dollars into escrow to cover potential losses on a big stock-market derivative that Berkshire bought a few years ago. For obvious reasons, Berkshire would prefer not to tie up its cash that way.

    There's certainly a good argument to be made that rules should not be changed retroactively. The fact that it was Nebraska Senator Ben Nelson who proposed the exemption to the reform, however, startled people. Sen. Nelson owns an estimated $6 million of stock in Berkshire, and having hometown (and world) hero Warren Buffett in his camp is presumably helpful in election campaigns. The Wall Street Journal reports Berkshire is Nelson's largest campaign contributor.

  2. 1) He does not want to be "margined-to-market with his put-options and other derivatives.
    2) He could easily become illiquid and probably have to sell 200-million shares of KO "at the market" to satisfy margin calls. :eek: :( :mad: :D
  3. pspr


    Funny, Warren wouldn't give a dime to help update the University of Nebraska stadium.

    His priorities are all wrong. I think he is like the Kennedy's and feels guilt about all the money he has made.

  4. Hence his statements a couple years ago for us to pay higher taxes to assuage his guilt of not having payed enough.
  5. University of Nebraska alum? :confused: :( :D
  6. S2007S



    I wonder why all of the sudden he is worried about these new regulations, funny thing is that years ago he called derivatives "weapons of mass destruction." Also said it was a fool's game...So why now is he trying to block these regulations????????

    Exacerbating the problem of derivatives and leverage is the short-term trading mentality and high turnover in the stock and bond markets, Mr. Buffett and Mr. Munger added. "There is an electronic herd of people around the world managing an amazing amount of money" who make decisions based on minute-by-minute stimuli, said Mr. Buffett, adding, "I think it's a fool's game."

  7. BSBA University of Nebraska
    MBA Columbia University (including Ben Graham)

  8. $$$
  9. ?.....??.....WTH?......WTF?.....Okay, you "got" me. I don't understand the mentioning of Ben Graham.....unless you're implying that you and he were classmates? I don't know. :confused: :eek: :(

  10. Spell checker should have meant spayed or neutered not payed or paid.

    "Hence his statements a couple years ago for us to pay higher taxes to assuage his guilt of not having been spayed enough."
    #10     Apr 28, 2010