Buffett Angers Rival Insurers Over Moody's Deal

Cries of foul arose yesterday against Warren Buffett after the powerful credit-rating agency Moody's Investors Service - in which he's the largest shareholder - began pulling the rug out from under his rival insurers to force them into "egregious" deals with Buffett.

Allegations of conflicts came from insurance industry sources as the credit crisis deepened over fears that insurance guarantees trading widely on Wall Street - basically private IOUs backing trillions of dollars of bonds and junk paper debt - could become almost worthless.

Last week, the Oracle of Omaha rode to the rescue of the bond-insurance crowd, saying he'd shoulder some of the guarantees himself using his own insurance empire, but only for a very high price. He also would cherry-pick the best insurance bets for himself and leave the failed books of business behind in company shells.

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Comments

[realitytrumpsbull]

Another GWOT suspect, as far as I'm concerned...rich people don't get that way selling french fries...in­ternationa­l banking crap...where does he keep the gold teeth?

[georgecrupper]

Well Americans the Stupid, are you satisfied with your pacifier of beer, entertainment and a credit card a 24 hours of misinformation? When will you recognize that you are being screwed by business, government and religious leaders. A major corporation can not make a profit without cooking the books and government subsidies. You are now voting for HOPE and I hope you get it...cause you will.

[WIpatriot]

Got it, thanks.

[themodernleader]

Have you noticed as the Market gets some upward momentum through hyped information and feel good cheer leaders, suddenly sellers come out ot the wood work and bomb the indices? Why? The insiders know that the whole system is bankrupt. Even foreign money is reluctant to come in with our dollars without guarantees of control.
The next wall street and banking managers of our destiny will be foreign citizens representing governments. Either that or let the whole system collapse and then we Americans clean up our own house.

[WIpatriot]

SWFs may buy in and prop up the market for a while, tml, but eventually it will deflate.

[doctordawg]

Now you know. There is virtually no such thing as an ethical billionaire. No one can work hard enough to ethically make a billion dollars. You make that kind of money by gaming the system, exploiting the law, and monopolizing markets.

To paraphrase that old saying: "Steal a loaf of bread and they send you to prison. Steal a railroad and they make you a Senator."

[Justinpassing]

Splitting the Monolines is the mother of all desperate moves and will bring no improvement of the situation..... and in fact is more apt to exacerbate it. The derivatives rat's nest was foisted to be as widely spread and as criss-crossed with counter parties (3 to 5 layers deep) as possible....When our Establishment concocted this Heinous monstrosity it had to have ABSOLUTELY NO FLAWS or chinks ...... but one came along and it's name was.........wait for it..........dubya. In his desperation to have the housing market be the economic engine of his tenure, they were so desperate to make it work until he could retire...they pulled out all the stops and ran it right over a cliff, and that was the hidden flaw.. unforeseeable, maybe, but certainly predictable, because arrogance plus incompetence = self destruction.

[WIpatriot]

If Buffett is angering his rivals, I gotta love it....

[mrcontinental]

They're just pissed that they didn't come up with the idea first.

I'd like to sit down with ole Warren, fire up a good cuban cigar, pour a straight cognac on the rocks and just pick his brain for a few hours.

[WIpatriot]

You'd come away with a book, MrC.

[Mavin1620]

When you follow this article, the last paragraph says:

"Last night, The Wall Street Journal reported that Ambac Financial Group is discussing a plan to raise at least $2 billion in much-needed capital to help the world's second-biggest bond insurer retain its top-notch credit rating."

In the 1980's the insurance industry had a meltdown then, too, caused by their own ignorance and greed. Bailouts, such as the one described here, failed.

Buffett can do these things because he is "Cherry-picking" what he takes and leaving the rest, plus charging 150% to pull the irons he wants out of the fire. In the long-term, this may harm the insurance industry, and may harm Buffett's fortune. However, he had a finely honed knack of self preservation and enrichment. Most investors and fund managers cannot achieve what Buffett does under any circumstance. In a stressful, shifting situation, it is less likely to be a good outcome.

Throwing good money after bad (an apt cliché) is foolish. Anyone who invests in this "much-need" "second biggest" bond deal is investing fools capital. Don't do it. Keep an eye on your funds, and if they invest, bail. The domino effect may bring down the investing fund. The risk/return ratio is too high. There are safer investments.

This is just my personal opinion, and not intended as financial advice.

[paixa3]

The situation is not good.

However, I have to say that from time to time, watching ignorant, arrogant and greedy people getting kicked in the balls is rather enjoyable.

[WIpatriot]

One of my hobbies, too.