Video: Warren Buffett on ‘Too Big to Fail’

Here’s more from Warren Buffett on CNBC this morning. This time he talks to Becky Quick about ‘Too Big To Fail’.

CNBC host Joe Kernen sides with the Occupy Wall Street protesters, saying:

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I have real problems with Too Big to Fail. And I think that the Occupy Wall Street movement – they may not know exactly why they’re upset – but the notion you can — I was talking about it over this weekend. Let’s say you’re a public employee and went to Las Vegas with tax money. You were allowed to put as much tax money that you want on black or red or on black jack. and if you lost it, the taxpayers lost it and you didn’t care. But if you made it, you got to keep it. That’s basically what Too Big to Fail institutions are able to do, and to leave, you know, to leave with taxpayer money, with the profits. And I see why Occupy Wall Street is — has a problem with that, although I’m not sure that they understand.

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Kernen asks Buffett whether we can regulate them to “keep them honest” or whether we need to “break them up”. Buffett responds in the video below; he doesn’t really answer the question though. Buffett also talks a bit about derivatives (uncomfortably) as well before Becky Quick moves the conversation to more pleasant topics, Berkshire’s businesses.

P.S. – when watching, remember that, as Kerman says, Warren Buffett has “a vested interest in Too Big To Fail”.

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5 Comments
  1. Mary Saunders says

    Bust ’em, and part them out to the real world.

  2. Mary Saunders says

    Bust ’em, and part them out to the real world.

  3. David Lazarus says

    It is not just too big to fail banks but the same for corporations. They are invariably multinational and so avoid taxes everywhere. Maybe a solution of unitary taxes on all companies with overseas interests so that it ends multinationals tax arbitrage. 

    With banks I would end deposit protection for all banks with overseas holdings. That way if a bank opens an office abroad its customers will know that that are no longer protected in the event of bankruptcy. Banks will have two options. Get rid of their overseas banks, or cut risks so much that they are able to maintain customers without deposit insurance. 

  4. Anonymous says

    It is not just too big to fail banks but the same for corporations. They are invariably multinational and so avoid taxes everywhere. Maybe a solution of unitary taxes on all companies with overseas interests so that it ends multinationals tax arbitrage. 

    With banks I would end deposit protection for all banks with overseas holdings. That way if a bank opens an office abroad its customers will know that that are no longer protected in the event of bankruptcy. Banks will have two options. Get rid of their overseas banks, or cut risks so much that they are able to maintain customers without deposit insurance. 

  5. ChrisBern says

    I was glad to see Kerman ask Buffett some tough questions…however, when Buffett started talking about bank shareholders getting wiped out, Kerman should’ve refocused the conversation onto BONDholders, not shareholders, since they were the ones who were the primary beneficiaries of TBTF.  I believe even Fannie and Freddie bondholders got off 100% scot free–the tab picked up by taxpayers of course-which is an unfathomable and borderline criminal action for the gov’t to have done to its citizenry.

    1. Edward Harrison says

      It was an unconscionable bailout because sovereign wealth funds in places like China were big holders of agency debt. Now the agencies are being used as a giant slush fund to prop up the mortgage market; hence giant losses that all accrue to taxpayers instead of the holders of MBS.

      Fannie and Freddie should be liquidated.

  6. ChrisBern says

    I was glad to see Kerman ask Buffett some tough questions…however, when Buffett started talking about bank shareholders getting wiped out, Kerman should’ve refocused the conversation onto BONDholders, not shareholders, since they were the ones who were the primary beneficiaries of TBTF.  I believe even Fannie and Freddie bondholders got off 100% scot free–the tab picked up by taxpayers of course-which is an unfathomable and borderline criminal action for the gov’t to have done to its citizenry.

    1. Edward Harrison says

      It was an unconscionable bailout because sovereign wealth funds in places like China were big holders of agency debt. Now the agencies are being used as a giant slush fund to prop up the mortgage market; hence giant losses that all accrue to taxpayers instead of the holders of MBS.

      Fannie and Freddie should be liquidated.

  7. Stocksystm says

    Kernen talks out of both sides of his mouth.  This week he made fun of the Occupiers which is not surprising given he works for G.E., one of the largest financial companies in the world.  It doesn’t appear Kernen has any morals or ethics.

  8. Stocksystm says

    Kernen talks out of both sides of his mouth.  This week he made fun of the Occupiers which is not surprising given he works for G.E., one of the largest financial companies in the world.  It doesn’t appear Kernen has any morals or ethics.

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