11/30/2009 11:32 pm ET | Updated May 25, 2011

Et tu, Warren?

There is a long list of people who are accused of unfairly profiting from our national financial crisis - Hank Paulson, John Thain, anyone who has ever worked at Goldman Sachs, AIG, Fannie Mae, and Freddie Mac. But no one ever mentions Warren Buffett. The "Oracle of Omaha," however, has arguably benefited as much or more than anyone from the US taxpayer funded bailout of the financial industry.

Consider Mr. Buffett's investment in Goldman Sachs on September 24, 2008 via his Berkshire Hathaway holding company. Goldman stock was trading at $125 when Mr. Buffett offered his cash infusion. In exchange for $5 billion, he received $5 billion worth of preferred stock. His preferred shares included a 10% dividend and warrants, which granted him the right to purchase up to an additional $5 billion in Goldman stock at $115 per share. That price was an 8% discount at the time.

One month after his initial investment, as the financial crisis worsened, Goldman Sachs was trading below $100 per share. The decline from $125 more than offset the value of Mr. Buffett's preferred share's dividend. Mr. Buffett, meanwhile, also had a stake in Wells Fargo that he had increased to over $9 billion in early 2008. Wells Fargo was also struggling with its own large loan losses, which were compounded by the bad decisions made by newly-acquired Wachovia.

Concerned about what was happening with major financial companies, the government began to take extreme measures to support nine institutions that it had deemed "too big to fail." The largest investor in two of them was Mr. Buffett. Wells Fargo received $25 billion of TARP funds. Goldman Sachs, meanwhile, got $10 billion in taxpayer money. Both companies also took advantage of FDIC guarantees to issue new debt, which was far below market rates and did not dilute the existing shareholders. These FDIC guarantees were arguably even more valuable to the recipient companies than the TARP cash injections because without them their futures were in doubt; any attempt to issue debt would have likely resulted in exorbitant interest rates and a reduction in the percentage of the company owned by existing shareholders.

The net result of these actions was a tremendous financial windfall for Mr. Buffett. Goldman Stock rebounded from a low of $52 per share, which was more than 50% below his original purchase price, to climb above $170. Wells Fargo bottomed out below $9 per share but presently trades at over $28. These developments have further enriched Mr. Buffett. Recent published estimates put his profit at over $2 billion on just the Goldman investment.

Mr. Buffett, of course, is renowned for his investing prowess and deserves credit for seeing value in these companies during a crisis. Less insightful investors and economists doubted the futures of Goldman and Wells Fargo. There is, nonetheless, what appears to be an inherent unfairness in Mr. Buffett's returns and those paid to the American taxpayers for their bailout investments. Estimates of Mr. Buffett's profit appear to be 40%+ in less than 12 months. Taxpayers, though, were less fortunate; they invested twice as much in Goldman, paid 20% less than Mr. Buffett for stock, but only received $1.1 billion in profits.

The Goldman case, surprisingly, was not an isolated incident. Mr. Buffett had investments in multiple companies that were receiving federal TARP funds. Publicly disclosed stock holdings show more than 30% of his investments were in companies bailed out by TARP. He also enjoyed the benefit of having his large holdings in these businesses added to the federal TARP list and that relieved them from the burden of having to survive on their own merits in a bad economy, which was the fate of less privileged firms like Lehman Brothers, Washington Mutual, Wachovia and Bear Stearns.

No one is suggesting Mr. Buffett or his firm Berkshire Hathaway have acted unethically. His character and judgment have been above reproach in the investment community. Regardless, there is little doubt that if the exact scenario above had played out with the primary investor being not the affable Mr. Buffett, but instead a multi-billion dollar hedge fund from Greenwich or a state-owned investment fund from China, there would have been immediate Congressional hearings and demands that "profits reaped from a US Taxpayer bailout" be subjected to special taxes or other claw backs. The unasked question is why no one has ever complained about Mr. Buffett's multi-billion dollar bonus provided courtesy of the US taxpayers.

And that's a question worth asking.