Buffett: President, not Congress, needs to deal with automakers
digg it!
Facebook
del.icio.us
Seed Newsvine
Fark It
Reddit
By JOSH FUNK / The Associated Press
OMAHA -- Warren Buffett said U.S. automakers need a new business model to better compete, whether it takes bankruptcy or a government bailout to achieve.
And if it does take a bailout, the president, not Congress, should negotiate it, said Buffett, chairman and CEO of Berkshire Hathaway and a member of President-elect Obama’s transition team.
Bankruptcy would be a poor solution for the auto industry, Buffett said, so he hopes a better way can be found to work out the union contracts and other issues the companies face.
Buffett spoke to Fox Business News in an interview broadcast Friday afternoon.
Buffett also said he would never serve as U.S. treasury secretary because he loves his current job too much.
The government should insist top executives at Ford Motor Co., General Motors Corp. and Chrysler LLC invest a significant percentage of their own net worths in the Detroit-based companies, Buffett said, ensuring both executives and taxpayers would share in any profits or losses.
The government should be able to drive a deal like one of the ones he makes when Berkshire buys businesses, because automakers appear on the brink of bankruptcy, according to Buffett.
He said he’d tell the auto executives, “’We’ll give you more upside (than bankruptcy), but you’re going to lose if we lose.“’
He reiterated his belief that the U.S. economy will eventually recover from its current problems, but he predicted there will be more pain first.
“There are going to be more people unemployed. And I mean, I can’t think of anything worse than going home to a family, saying, ’I lost my job today,“’ Buffett said.
He said he expects the unemployment rate to continue climbing past 8 percent and he doesn’t expect the rate to start falling anytime soon.
Buffett said he thinks the current treasury secretary, Hank Paulson, is a “high-grade guy” doing a good job with an extremely tough situation as he tries to reinvigorate the economy.
“I don’t think I could have done a better job, and I don’t think most of the congressmen could do a better job,” Buffett said.
He said he doesn’t regret agreeing in September to invest $5 billion in Goldman Sachs, because he doesn’t think the investment bank would still agree to pay Berkshire the 10 percent annual dividend Goldman promised. Since Goldman announced Berkshire’s investment, it received $10 billion in assistance as part of the government’s $700 billion bailout plan.
Shares of Buffett’s Omaha-based company have fallen significantly this month since Berkshire reported a 77 percent drop in this year’s third-quarter profit. His report cited unrealized investment losses of about $1 billion weighed on the results.
Class A shares of Berkshire, which are still the most expensive U.S. stock, were selling for $81,900 Friday afternoon. The stock set a new high of $151,650 last December after an exceptionally profitable third quarter that was helped by a $2 billion investment gain.
Buffett said he’s not bothered by the recent share price decline, because he’s been through similar drops before and he values Berkshire based on its underlying businesses.
Berkshire owns a diverse mix of more than 60 companies, including insurance, furniture, carpet, jewelry, restaurants and utility businesses. And it has major investments in such companies as Wells Fargo & Co. and Coca-Cola Co.
———
On the Net:
Berkshire Hathaway Inc.: www.berkshirehathaway.com
Fox Business News: http://www.foxbusiness.com
Post Your Comment
Standards and RulesYour posted comment will appear after it has been approved.
Frequently asked questions about story commenting.