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.
- 1 This 'woman calls police to order pizza' story isn't going where you're expecting
- 2 Watch what happened when food critics were unknowingly served McDonald's
- 3 Jimmy Carr's controversial Oscar Pistorius joke goes a bit too far at the Q Awards
- 4 Ottawa shootings: Bruce MacKinnon's cartoon is the perfect tribute to soldier Nathan Cirillo shot dead at war memorial
- 5 Of course, teenage girls need role models – but not like beauty vlogger Zoella
Isis releases first video showing the stoning of woman accused of committing adultery as her father shouts 'don't call me Dad'
This 'woman calls police to order pizza' story isn't going where you're expecting
FCKH8: Provocative anti-sexism video showing young girls swearing reinstated by YouTube
Diwali: What is the festival of lights – and how is it celebrated around the world?
Jimmy Carr's controversial Oscar Pistorius joke goes a bit too far at the Q Awards
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Thousands with degenerative conditions classified as 'fit to work in future' – despite no possibility of improvement
Residents should throw a street party and mix with immigrant neighbours, councils told
London bus driver 'kicks gay couple off for kissing'
iJobs Money & Business
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...
£350 - £360 per day: Ashdown Group: SQL Developer with T-SQL, Watford, Hertfor...
120-150k: Accountancy Action: We are looking for an experienced CFO from a min...
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...