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CNBC: One-On-One with Buffett

The video is pretty all-encompassing and runs just under 30 minutes. Buffett is down on Kraft-Cadbury, raising rates and the bank tax. He is up on Wells Fargo. That sums it up pretty well.

 

 

Quotes

On Wells:

Well, my guess is that the revenue and all of that is more or less like I expected.  I mean, Wells, right straight through this period has done pretty much exactly what they said they would do and they’ve made money consistently through it.  They’ve run into much larger losses than anybody anticipated three or four years ago but they can handle them very easily.  Last year we talked about ‘em having 40 billion of pre-provision income in 2009, and you know, they had it, and that easily handles 20 billion, roughly, of losses…

Wells runs a terrific bank.  They’re a very customer-oriented bank.  They’re almost like thousands of community banks when you get right down to it.  They have a lot of services they sell for each customer.  So their revenues are going to come through.  And actually when the stress test was done in the spring of last year, that’s where the people evaluating them were way off, was on the revenue number.  Wells did not disagree with them on the possible losses number, but they felt that the people just didn’t understand the revenue potential, that were looking at them, and I agreed with them.

On the bank tax:

If it’s some kind of a guilt tax or something of that sort because banks were among the whole United States that were saved back in 2008, everybody was taken care of then.  And the banks, basically, somebody like Wells, it’s cost them a lot of money to be in the TARP and it was basically forced upon them.  (They) didn’t want to take the money, but really had no choice.  So that’s cost Wells a lot of money.  The government’s made a lot of money off Wells.  They’ve made a lot of money off Goldman.  They’ve made a lot of money off J.P. Morgan.  And where they’re going to lose money, at least where its possible they’ll lose money, is in the auto companies…If you’re really looking for the people who benefited from government losses, you’d have to look there.  Or if you look at Fannie or Freddie.  Are you going to go and tax the members of Congress who ran Freddie and Fannie –…

But I just think a tax that’s enacted with the idea that the headlines will be appealing and that a certain amount of vengeance will be achieved, I don’t think that’s the greatest form of tax policy.

On AIG’s CDS payments:

I mean, if you look at AIG, AIG, primarily through its subsidiaries, but they had contracts with millions of people who were counting on getting paid on their life insurance, getting paid on annuities, getting paid on property and casualty claims.  And the government’s actions enabled AIG to live up to millions of contracts.  And it makes them mad that they lived up to a good contract with Goldman Sachs, although Goldman was very protected. 

Also see the following CNBC articles:

 

Transcript:  CNBC Transcript: Warren Buffett’s ‘Stock Split’ Interview – Part One

About 

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College. Edward also writes a premium financial newsletter. Sign up here for a free trial.