Buffett defends Goldman Sachs at Berkshire annual meeting
Embattled banking giant Goldman Sachs Group got a strong vote of confidence Saturday from Warren Buffett -- but a less-ringing endorsement from Buffett's long-time business partner, Charlie Munger.
Speaking in Omaha at the annual shareholders' meeting of Berkshire Hathaway Inc., Buffett's holding company, the investing legend defended his $5-billion preferred-stock investment in Goldman made in 2008, and said his view of the bank wasn't changed by the Securities and Exchange Commission's fraud suit against the company.
"We love the investment," Buffett said. "I do not hold against Goldman the fact at all" that the SEC sued. He said it did not fall "within my category" of where reputational issues would call into question the Berkshire investment.
"If it leads to something more serious, then we will look at the situation at that time," he said.
The SEC sued Goldman last month, alleging that the bank duped investors in a subprime-mortgage-related investment it sold in 2007 by failing to give them the entire story about the deal -- and who really stood to benefit.
This week news reports said Goldman also is the target of a criminal investigation by the Justice Department.
Asked at the Berkshire meeting whom he would pick to replace Goldman CEO Lloyd Blankfein if the latter were to depart, Buffett said: "If Lloyd had a twin brother, I would vote for him. I have never given that a thought."
Munger, Berkshire's vice chairman, said there were "plenty" of chief executives he would like to see replaced, but that Blankfein wasn't among them. Even so, Munger appeared to hedge his support for Goldman.
From the Wall Street Journal:
Munger, who told The Wall Street Journal this week that Goldman was engaged in "socially undesirable" activities, told shareholders that he would have voted against SEC prosecution.
But Mr. Munger indicated he believes Goldman may have come closer to the edge of suspect behavior than Mr. Buffett does. "I think it was a closer case than you do," he told Mr. Buffett during an exchange.
The 20,000-some Berkshire shareholders packing the Qwest Center arena for the annual Buffett lovefest had a "tepid" reaction to his comments on Goldman, the Journal said: "While a number of comments by the Berkshire chairman in the morning were greeted with strong applause by the crowd . . . his comments on Goldman were largely met with silence."
-- Tom Petruno
Photo: Warren Buffett. Credit: Daniel Acker / Bloomberg News