Buffett trumps TARP

Eddie Braverman's picture
Eddie Braverman - Certified Professional
Rank: The Pro | banana points 21,114

To almost no one's surprise, the Oracle of Omaha Warren Buffett managed to strike a better deal for Goldman Sachs than the Treasury did. For half the investment Hank Paulson made, Buffett managed to garner 4 times the equity for his shareholders than the U.S. taxpayer received under the Treasury bailout.

"Paulson said he had to make it attractive to banks, which is code for 'I'm going to give money away,'" said Joseph Stiglitz, who won a Nobel Prize in 2001 for his work on the economic value of information.

"The worst aspect of this is that they were designed not to do what they were supposed to do," he said in a telephone interview from Paris Jan. 7. "In many ways, it's not only a giveaway, but a giveaway that was designed not to work."

As word of the disbursal of TARP funds trickles out, we will no doubt see many instances of the government overpaying for toxic crap. With Obama warning that we should all get used to trillion dollar deficits, at what point does the well run dry?

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Comments (5)

Jan 9, 2009

long live the intelligent investors.

maybe paulson should have picked up some of the ben graham writings.

..there's a difference in buffet's investment and the government's bailout. buffet was looking to garner a sexy ROI while paulson was trying to prevent anymore financial calamities.

We're about to enter a Great Depression.
Don't you want a president who's already dressed for it?

I'm making it up as I go along.

Jan 12, 2009

You also need to consider the fact that Paulson needed a buy in from everyone, even if they don't need the fund. He can't afford to have well off firm like GS not be part of the program. otherwise a firm might as well declare bankruptcy as taking TARP money will be a sign of serious financial stress.

Jul 4, 2009

Either way... with the terms Buffet worked out with GS, it should be an embarrassment to Paulson. Paulson use to work for GS... He probably got a cut.

If you ain't buy side what are you doing on Wall St.? Gimme something good sport...

Jul 4, 2009

Hmm. Whereas Buffett was admonished a few months ago for the stupidity he showed in making this deal, he seems to now be praised far and wide for the same deal.

Jul 4, 2009