Monday, September 29, 2008

Sage of Omaha got it right – so why not everyone else?

Warren Buffett's Happy Housing Story

A subsidiary to Buffett's Berkshire Hathaway was also involved in lending to low income households but has managed to maintain profitability and has a low foreclosure rate. How? Because they avoided securitisation and so had to take responsibilty for the quality of their loan book. They also made sure loans were actually affordable and most importantly that the buyers were buying for a home, not a speculative investment. It all makes so much sense - so why couldn't all mortgage lenders have followed Buffett's model?

Posted by an bearin bui @ 02:02 PM (673 views)
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3 thoughts on “Sage of Omaha got it right – so why not everyone else?

  • Warren Buffett is a genius and it has been proved by events. In 2003 he famously said that CDO’s were “financial weapons of mass destruction”…. Prophetic! Mind you he is the richest man in the world

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  • WB has known a few crisis during his lifetime starting with the Great Depression when he was a boy. He also has burnt his hands on some bad investments he made in the past (none with borrowed money BTW) and learn his lessons.
    The problem with all these financial “wizz kids”, they all get hired when the market go up and get laid off when the market crash so they will never learn, neither this time nor next time.
    Self regulation is a joke, certainly with greedy bankers.

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  • Which begs the question as to why he wasn’t made Treasury secretary? Mind you he did get a stake of Goldman on the cheap, but it must hurt the guy to see his country in this state.

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