The Ultimate Crony Capitalist
3rd November 2009
The announcement (pdf) this morning that Warren Buffett’s Berkshire Hathaway is acquiring Burlington Northern railway raises some interesting questions. To begin with, if Mr. Buffett had $44 billion sitting around to spend, why did the taxpayers have to put $25 billion into Wells Fargo, $6.6 billion into U.S. Bancorp, and $3.38 billion into American Express through the Troubled Asset Relief Program? Berkshire Hathaway, as of its last annual shareholder letter (pdf), owned 13.1% of American Express, 7.2% of Wells Fargo, and 4.3% of U.S. Bancorp. These are significant positions, worth a lot more than the Buffett stakes in See’s Candies or the Washington Post Company that you read more about in the newspapers because they fit with the folksy, straight-shooting image Mr. Buffett likes to project. If Mr. Buffett had all that capital to spare, why didn’t he use it on propping up his own positions himself rather than accepting a government handout for which he later hailed Henry Paulson and Timothy Geithner as “heroes”? And that doesn’t even touch the matter of Berkshire Hathaway’s investment in government-backed Goldman Sachs, on better terms than the taxpayers received for their Goldman aid.