Warren Buffett Doesn’t Like Obama Bank Tax, Saying it’s “Trying to Punish People”
I was surprised to hear Warren Buffett state in an interview on Bloomberg Television yesterday that he opposed the Obama tax on financial institutions, as he views it as “trying to punish people.”
Buffett said in the interview that “I don’t see any reason why they should be paying a special tax,” as those proposing it “are trying to punish people. I don’t see the rationale for it.”
In his usual but insightful humorous way, Buffett contrasted it to the debacle of Fannie Mae and Freddie Mac saying, “Look at the damage Fannie and Freddie caused, and they were run by the Congress. Should they have a special tax on congressmen because they let this thing happen to Freddie and Fannie? I don’t think so.”
How many reading this wished there was a tax on those in Congress because of their inept handling of Fannie and Freddie, along with the rest of the banking debacle, which they should have stayed out of and let run its course in the market?
All of this, while interesting, isn’t what surprised me though. What surprised me was the comment Buffett made in the interview concerning bailing out the banks.
He stated: “Most of the banks didn’t need to be saved. Including Wells Fargo.” Buffett’s Berkshire Hathaway (NYSE:BRK-A) is the largest shareholder in Wells Fargo.
Why this is close to being shocking is Buffett’s original response to the bailing out of financial institutions in the beginning of the disastrous decision, being probably the biggest and most well-known cheerleader to making it happen, and quite possibly may have been the person that pushed it over into becoming a reality.
Just do any type of Internet search using the terms Warren Buffett and bailout and you’ll see what I mean. His name was all over the place in supporting the ’cause,’ and with certainty had to be consulted and put out there as one of the lead men to get it supported and done.
Even at the time some questioned Buffett’s involvement because his company had a lot of ownership in those that would benefit directly from the TARP funds like Bank of America, Goldman Sachs, American Express and US Bancorp.
“Buffett’s company, Berkshire Hathaway, hasn’t received any of that federal aid, but Berkshire, based in Omaha, Neb., owns stock valued at more than $13 billion in the top recipients of TARP funds, including Goldman Sachs Group, US Bancorp, American Express and Bank of America, which analysts all thought were in deep trouble before TARP was approved in October.”
Now to hear his say that the majority of the financial institutions didn’t need the TARP funds in response to the Obama tax on banks and financial institutions over the next decade is schizophrenic to say the least.
Don’t get me wrong, I’ve followed and written about Warren Buffett for years, largely in a positive light, concerning his management abilities and investment prowess. But this is something I really haven’t seen from Buffett before, and this is what seems to be ‘confusion.’
Is his age finally catching up with him? Does he remember what he was saying in the press just a little over a year ago? It’s extraordinary to see him contradict himself in the way he has in saying what he did, and I’m not saying this because I support the Obama tax, because I don’t, as if it does become a reality, the costs will just be passed on to consumers and businesses, which will make the cost of living even higher in ongoing difficult economic times.
The point is really about the faculties of Buffett and whether he’s becoming a liability to his company and position. If he is going in diametrically opposite directions than from the past, then this is a legitimate question to ask; especially for shareholders in the company.
For me the key is what he said about most of the banks having no need to be saved. If not, then what was Buffett trying to communicate during the process of decision-making concerning the proposed bailouts, and why did he press the issue as being crucial in reference to having to hurry up or it would be too late?
If he’s not forgetful, then one has to wonder what he’s thinking concerning this matter and why he is speaking out now in ways that undermines his own public input over the last year or two.
If Buffett didn’t believe banks needed to be bailed out, he should have been a ferocious opponent of it at the time he was doing interviews on how much the banks needed it. Why now when the new tax is being considered for banks which will last for years and dip in a big way into their profits?
You know the answer of course, but what has shocked me is this is the first time in my life of following Warren Buffett where I’ve seen him make a complete turnaround on a position he has backed and publicly stated he’s in favor of.
I’ve seen him kowtow in the past to lawmakers in other areas which made me think he’s in favor of big government (for example estate taxes), but I didn’t think I’d ever seen him seemingly forget what he recently said or change his mind on it.
Now that he has, you know there is something about it that will have a huge impact on the bottom line of Berkshire Hathaway over the long haul, and this is probably why Buffett went so much out of character and contradicted his past remarks and beliefs.
Either way, there seems to be something lost concerning Warren Buffett when you take into account his past behavior, which whether you agreed with him or not, you still had a high regard and respect for him. This seems to take something away from his sterling past, if indeed he is competent and of sound mind and is just moving pragmatically in response to the consequences of the Obama tax on his holdings.
Remember, I’m referring to his statement that “Most of the banks didn’t need to be saved. Including Wells Fargo.” Those are the contradictory remarks, not his opposing the Obama tax.