Goldman Sachs and Warren Buffet
Goldman Sachs was recently brought upon on fraud charges by the SEC because the commission thought that the company defrauded its investors in the mortgage crisis. Recently, Berkshire Hathaway CEO Warren Buffet has said at the Berkshire stock holders meetings that Goldman did not commit improper activities and that Goldman should be blamed because investors of the company lost money.
Goldman Sachs has come under fire for breaching the Abacus Act 2007. While Goldman retains that it has done nothing against the law. Buffet a long time investor of Goldman Sachs recently stated that if the current CEO of Goldman Lloyd Blankfein would resign he would want a twin of Blankfein in the Goldman’s CEO chair. Buffet spoke to his stock holders in a room filled with 400,000 investors and said that Goldman had a $3.6 billion dollar profit this quarter as compare to a year loss last year of $1.5 billion dollars. Buffet mainly supports Goldman because he feels that investors should be able to take losses from bad investment and not run the government every time they loose money. He feels that Goldman’s clients should be responsible for their actions and not Goldman Sachs.
The stock holders at the Berkshire meeting were supportive of Buffet’s statements about Goldman. Most of the stock holders felt that the Goldman allegation were political in nature and had no basis of the company. Berkshire Hathaway does have $5 Billion dollars invested in Goldman Sachs this could be the reason why Buffet is in support of the investment bank. However, if Buffet was not confident in the company he would not have made such a large gamble on the company. Goldman’s fraudulent activities allegation does come at a weird time in the global economic crisis, so it does seem plausible that the only investment house that survived from a takeover or bankrupt would be brought up on charges purely by a political maneuvering of the SEC. However, we must also look at the broad spectrum of this and see the well Buffet does hold $5 Billion of Goldman and he is an investor and would like to see his horse win. Thus, he could have supported Goldman the basis that others will listen to his word and bring up the stock value. We will probably never know what Buffet has in plan for the investment power house. However, one thing is for sure Buffet has a strong and keen brain for picking investments.
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