Warren Buffett Shows His True Colors: Green, and Uncooperative

Warren Buffett's public relations team wants us to think of the Sage of Omaha as a just-folks, grandpa, Will Rogers-kind of guy who just happens to be one of the wealthiest people in the universe. The emphasis got reversed yesterday, however, when Buffett was compelled to testify to the commission investigating the financial crisis. (He wouldn't come in just on the committee's request, and required them to issue a subpoena.)

More important than the image part of things, though, was his denial that anyone at the credit rating agencies -- he owns a boatload of Moody's, something like 13 percent of the company -- had any greater role in the crisis than you or me.

I do not fawn over big shots. Years ago, as an industry analyst at a big investment bank I used to meet CEOs all the time -- it was part of the job, I wasn't playing squash with them -- and with a few exceptions, we saw each other as necessary evils.

Buffett would take an interest in one of my stocks -- Salomon Brothers, for instance -- and clients and brokers would ask: "He's a smart guy! Shouldn't we do what he's doing?"

My answer was usually no, because even 20 years ago, Buffett has been able to extract special terms from even the largest companies, such as Salomon at the time, and more recently Goldman Sachs, and those terms were not available to the little guy.

So while I acknowledge his success -- especially early on -- at this point there is a lot of momentum working for him.

For all that the Great Man has reaped from our financial system, and especially all the profits he has earned in this turmoil, you would think he would be happy to talk, as he so eagerly does on CNBC. But no, he had to be subpoenaed.

That's a disappointment to me, because his hands are in our pockets in so many ways. His ownership of private companies extends to Fruit of the Loom, See's Candies, Benjamin Moore Paints, Tony Lama cowboy boots, all sorts of stuff.

Plus his public holdings. If you like fawning, here's a gush from CNBC:

As CEO and primary shareholder of Berkshire Hathaway (BRK), Warren Buffett, the world's most famous investor, has developed a well-known reputation of buying big stakes in companies he believes in. When Buffett buys shares of a company for BRK, the markets translate his moves as a vote of confidence for a firm's continued success.

But what has got me hot under the collar is this comment, covered by Bloomberg and the Financial Times:

Asked whether [Moody's CEO] Mr McDaniel and other managers should be dismissed, Mr Buffett suggested that they had been subject only to the "mass delusion" that there would be no nationwide housing market crash.

"I would say in this particular case that they made a mistake that virtually everybody in the country made," Mr Buffett told the commission, which was set up by Congress to study the causes of the collapse and was yesterday considering the role of the rating agencies.

"There was the greatest bubble I've ever seen in my life . . . Very, very few people could appreciate the bubble and that's the nature of bubbles," said Mr Buffett, who went on to add: "Rising prices are a narcotic that affects the reasoning power up and down the line.

"I am much more inclined to come along hard on the CEOs of institutions who caused the United States government to come in and necessarily bolster them than I am on somebody that made a mistake that 300m other Americans made."

Last -- some of today's coverage says that Buffett was not helped by the bailout, but that is up to interpretation. Here is part of a piece I wrote back in August, commending the journalistic efforts of Rolfe Winkler of Reuters. To quote him again:

Berkshire Hathaway, in which Buffett owns 27 percent, according to a recent proxy filing, has more than $26 billion invested in eight financial companies that have received bailout money. The TARP at one point had nearly $100 billion invested in these companies and, according to new data released by Thomson Reuters, FDIC backs more than $130 billion of their debt.

To put that in perspective, 75 percent of the debt these companies have issued since late November has come with a federal guarantee.

[Buffett] even traded the bailout, seeking morally hazardous profits in preferred stock and warrants of Goldman and GE because he had "confidence in Congress to do the right thing" - to rescue shareholders in too-big-to-fail financials from the losses that were rightfully theirs to absorb.