US investor Warren Buffett, chairman and chief executive officer (CEO) of Berkshire Hathaway Inc., says that the markets are unlikely to fall any further and only a 9/11 kind of situation could rock the US economy now.
No regrets: Chairman and chief executive officer of Berkshire Hathaway Warren Buffett. Andrew Harrer/Bloomberg
“The market sort of formed a plateau at the bottom right now but if you have got some horrible events, some of the 9/11 type of event or worse, you could have something that could be really disruptive and start things all over again. We are past the critical point,” Buffett said.
In an exclusive interview with CNBC’s Becky Quick— marking the one-year anniversary of the collapse of Lehman Brothers Holdings Inc.—Buffett described the phone calls he got over that weekend in September 2008 as Lehman and American International Group Inc. (AIG) battled for survival. He didn’t make any deals and says he has no regrets about what he did or didn’t do. Edited excerpts:
We are one year out from Lehman’s (collapse) and a lot of people are trying to figure out whether it was the right choice, whether it was the wrong choice (to let it collapse) ...What do you think?
...Lehman probably should have been—not saved, (it) isn’t the right word—but transferred in some kind of an orderly manner. I mean it was the chaos that came after the fact that it just happened and there was total disorder. And I think the trustee for Lehman has said between $50 billion (around Rs2.42 trillion today) and $75 billion at Lehman itself was lost unnecessarily because of the disorderly way that the liquidation took place.
Obviously, there were a lot of calls that were going on behind the scenes at that point. Were you a part of any of those calls?
Oh, I got a call. I was in Edmonton—at a social event—I was at the hotel (at) about 6 o’clock or so Edmonton time. And I did get a call from the head of Barclays—Bob Diamond—and Michael Klein, who was an investment banker. And they had just learnt apparently that the British authorities would not allow them to take over all of Lehman. This was not just the part that they took over later. But they were talking about coming in and taking over Lehman. And the British authorities had said if it involved more than £3 billion, as I remember, it needed the vote of shareholders and that couldn’t take place till sometime later, so they were asking if we would write an insurance contract that would protect everybody on the other side of trades until they got that shareholder approval. So they were looking for a solution, I can tell you, at about 8 o’clock on Saturday. And 8 o’clock in the evening. And they didn’t find one.
Were you surprised? I mean, what happened? Did you turn down this offer? What happened?