U.S. banks are “in the best shape in recent memory,” Warren Buffett told Bloomberg News recently, and won't cause another big meltdown.
Buffett, the chairman and CEO of Berkshire Hathaway Inc. of Omaha, has made billions over the past four years by investing in Wells Fargo & Co., Bank of America, Goldman Sachs Group Inc., U.S. Bancorp and General Electric, all companies with financial operations that fall under the category of banks these days.
And he could make $3 billion more today by cashing in warrants that give Berkshire the right to buy shares of Bank of America at a discount. But he's waiting instead.
“We're in no hurry,” Buffett told Bloomberg. “Nine years from now I would think that Bank of America as well as Wells Fargo and probably the other major banks will be worth considerably more money than they are now.”
The reason banks are so healthy, he said, is that since the 2008 financial meltdown they have rebuilt their capital, cleared out bad loans, cut expenses, reduced their risks in fragile real estate markets and repaid taxpayer bailouts.
Some experts still worry that the biggest U.S. banks are too big and that they could repeat the cascading problems that helped trigger the recent recession. Not Buffett.
“The banks will not get this country in trouble, I guarantee it. ... We do not have an unusually concentrated banking system compared to the rest of the world, and there are certain advantages in the largest capital market in the world to having banks that are somewhat consistent with the size of those markets.”
A World-Herald messenger bag will go to the winner of our "pick the elephant" contest.
'Pick the elephant'
What's a contest without a prize?
Our “pick the elephant” contest, announced last week, will award the winner a World-Herald messenger bag, handy for carrying wads of money or other goodies.
There's a bag stashed away for the first person to predict which big company will fall first in Buffett's big-game hunt for acquisitions.
He has said his “elephant gun” is loaded with cash and his trigger finger is itchy, but so far he's still looking for targets. For our contest, an “elephant” is an acquisition costing $5 billion or more, not counting buybacks of Berkshire stock or “bolt-on” acquisitions by existing Berkshire companies.
We've got a bunch of ideas so far, and we're anticipating that the prize will attract even more. Send your picks (one per person, please), along with the reasons for your choice, to the e-mail address below or via mail to
The Omaha World-Herald
1314 Douglas St., Suite 700
Omaha, NE 68102
Guesses will be confidential, and we'll do a story when, and if, Buffett makes a big purchase. Only the first correct pick wins the messenger bag, but you can have bragging rights if you had the right elephant in your sights, too.
Books on Buffett
Two more books that refer to Buffett are Jeff Matthews' “Warren Buffett's Successor: Who It Is and Why It Matters” (Kindle, $2.99) and Laura Rittenhouse's “Investing Between the Lines: How to Make Smarter Decisions by Decoding CEO Communications” (292 pages, McGraw-Hill, $28).
Both authors have written earlier books about Buffett. Matthews, of course, doesn't know the name of Buffett's successor as CEO of Berkshire, but his e-book lays out the reasons why we care and who the potential candidates might be.
Rittenhouse rates Buffett's letters to Berkshire shareholders as the “gold standard” of shareholder communications, very low on the scale of confusing verbal “fog” and fuzzy thinking.
CEOs should explain clearly their companies' performance, goals and even past mistakes and make complex subjects clear, Rittenhouse writes, quoting Buffett: “If you can't explain an idea, you haven't got your own thinking correct.”
BYD cars for police
Chinese auto and battery company BYD Inc., 10 percent owned by Berkshire's MidAmerican Holdings, won a contract to sell 500 all-electric e6 models to the police department of Shenzhen, China, for regular street patrol.
The cars can travel 186 miles between charges and reach speeds up to 87 mph, BYD said. The company's 300 electric taxis in Shenzhen have traveled more than 18.6 million miles, with one odometer topping 155,000 miles.
This year BYD plans to introduce a new dual-mode vehicle, code-named Qin, for the private-auto market.
We're still waiting for BYD's assembly plant in Omaha ...
Benefit for arts
Peter Buffett, one of Warren's sons, is performing his next “concert & conversation” at Fresno (Calif.) City College on Feb. 2, a benefit for the community's arts education programs, with tickets ranging from $45 to $100.
Buffett's live appearances relate to his 2010 book “Life Is What You Make It” and feature his compositions with social themes, including, “A Song for Everyone” and “Blood Into Gold.”
“Studies show that arts education programs improve the developmental growth of children while lowering delinquency and truancy rates,” Fresno State President John Welty said in a press release. “This benefit will support the kind of programs that have a profound impact on the lives of Valley children.”
The Omaha World-Herald Co. is owned by Berkshire Hathaway Inc.
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