At the peak of the financial panic, a billionaire fundraiser for the President of the United States makes a big bet on a politically connected investment bank, openly admitting he's counting on the government to bail that bank out. A year later, the investment bank is booking record profits. A couple of years later, the billionaire fundraiser for the President is cashing in his chips, making bank, while the rest of the economy slips.
This story is true. Why isn't it a huge scandal? Is it only because the president is Barack Obama and his billionaire bailout-profiteering fundraiser is the affable Warren Buffett?
The latest news is that he's making a $900 million gain this year by exercising his right to buy $5.9 billion in Goldman stock for $5 billion. This might sound like the sort of thing that is between Buffett and Goldman. But it's not. Taxpayers are paying for this.
Here's a quick walk through the timeline:
- During the 2008 campaign, Buffett was an economic advisor for Obama, and he hosted at least one fundraiser for Obama.
- In September 2008, just after the collapse of Lehman Brothers, Warren Buffett made a $5 billion investment in Goldman Sachs. At the time, he said:
- Obama voted for the bailout, kept bailout captains Ben Bernanke and Tim Geithner.
- (side note: Around this time, Sen. Dick Durbin pulled six figures out of the stock market and invested $98,000 in Buffett's Berkshire Hathaway)
- Goldman received many billions from the TARP and from the bailout of AIG.
- Nine months later, Goldman reported record profits.
- Today, we learn Buffett will profit $900 million just off the stock warrant purchase of his 2008 deal.
If I didn’t think the government was going to act, I would not be doing anything this week….
It would be a mistake to be buying anything now if the government was going to walk away from the Paulson proposal. Last week will look like Nirvana if they don’t do something.
What would we think if this happened in Russia?