Wednesday, January 20, 2010

Obama Supporter Buffett Is Against Obama Bank Tax

Warren Buffett agrees with me. (But he is invested in Goldman Sachs and Wells Fargo, so he is not impartial, I guess.)

Buffett Says He Can't See Rationale for Bank Levy (1/20/2010 Bloomberg)

"Jan. 20 (Bloomberg) -- Warren Buffett opposes President Barack Obama’s proposed levy on financial institutions because firms including Goldman Sachs Group Inc. and Wells Fargo & Co. already repaid bailout funds.

"“I don’t see any reason why they should be paying a special tax,” said Buffett, the chairman and chief executive officer of Berkshire Hathaway Inc., in an interview on Bloomberg Television today. Supporters of the plan to tax the banks “are trying to punish people,” he said. “I don’t see the rationale for it.”

"“Look at the damage Fannie and Freddie caused, and they were run by the Congress,” said Buffett. “Should they have a special tax on congressmen because they let this thing happen to Freddie and Fannie? I don’t think so.”"

I am all for the idea of creating a special tax on Congress for their incompetency and injury they inflict on Americans, intended or unintended.

Buffett also asserts that the rescue was unnecessary for most of the banks that received the TARP money, even though he was on record saying he decided to invest in Goldman Sachs because he expected the government to help financial firms.

If the banks didn't need TARP money, why didn't they say no when they met with then-Treasury Secretary Hank Paulson on October 13, 2008, you might ask? For one, they were closeted in a room at the Treasury Department and were told they couldn't leave the room without first signing a one-page document that stated the amount of "help". It was not like Paulson was holding a gun against their head (although we don't know for certain), but I wish someone (like Wells Fargo CEO) had called the bluff and stayed in that room. I am curious to know what would have happened.

If Obama wants to punish a bank whose bloated ($2 trillion) balance sheet is loaded with assets with dubious quality (agency bonds, mortgage backed securities, even a piece of real estate), who continues to provide loans to bankrupt or near-bankrupt companies (AIG) and who uses those assets to back the liability (US dollar) that many, many people around the world count on as their assets, he doesn't need to go no further than at the door of the Federal Reserve.


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