Summoned to New York, Buffett backs ally
Thursday 03 June 2010
The fundamental reason for Moody's disastrously optimistic credit ratings on billions of dollars of mortgage derivatives was not fraud or conflicts of interest, but simply the failure to predict a nationwide housing market collapse in the US, Warren Buffett said yesterday – and even he hadn't predicted such a thing.
In a full-throated defence of the credit rating agency's chief executive, Raymond McDaniel, who testified alongside Mr Buffett, the billionaire investor said that Moody's and its executives should not be singled out for their contribution to the financial crisis.
He said he was more inclined to condemn firms that needed to take government bailout money, of which Moody's was not one. "I think when society has to step in to save institutions for societal reasons, the chief executive should go away broke, and I think his spouse should go away broke. But I don't know who – except John Paulson and Michael Burry [two fund managers famous for successfully betting on a housing crash] – could have been chief executive of Moody's and come up with better ratings."
Mr McDaniel made "a mistake that 300 million other Americans made... That's the point of bubbles, they become mass delusions."
Mr Buffett has sold some of his 20 per cent shareholding in Moody's since the credit crisis prompted lawmakers to look at changing the business of credit ratings, and he now has just 13 per cent. Although Mr Buffett conducted his appearance before the FCIC in his usual, avuncular fashion, he made it clear he had not wanted to testify by refusing to make an opening statement before taking questions.
"Thank you for coming," the commission's deputy chairman, Bill Thomas, said to him. "Thank you for the subpoena," he replied.
International Women's Day 2014: The shocking statistics that show why it is still so important
Singapore sting: Sky-high prices are pushing locals to the edge of affordability
International Women’s Day: 'When a man gives his opinion, he's a man. When a woman gives her opinion, she's a bitch' - feminist quotes from female icons to inspire you
International Women's Day 2014: Cherie Blair - ‘Today is a chance to see how far we still have to go’
Dead woman's body found sitting in a car after six years after direct debits ran $54,000 bank account dry
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
Ukraine crisis: Russia dismisses '3am ultimatum' as 'total nonsense'
If you're horrified by a flame-roasted dog, you should be shocked at a hog roast
Poor 'live like animals' says Boris's privately educated sister after going on 'poverty safari'
White people become less racist just by moving to more diverse areas, study finds
Exclusive: Impact of immigrants on British workers ‘negligible’
- 1 International Women's Day 2014: The shocking statistics that show why it is still so important
- 2 Orgasm machine to deliver climax at the push of a button
- 3 Singapore sting: Sky-high prices are pushing locals to the edge of affordability
- 4 Liam Neeson turned down James Bond role because late wife Natasha Richardson said she wouldn't marry him if he took it
- 5 Dead woman's body found sitting in a car after six years after direct debits ran $54,000 bank account dry
iJobs Money & Business
£12000 per annum: Inspiring Interns: The company works with Tier 1 FTSE 100 Ba...
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£37000 - £40000 per annum + £20000 benefits package: Pro-Recruitment Group: **...
£30000 - £35000 per annum + generous benefits: Pro-Recruitment Group: Mixed Ta...