Due to an unexpected outbreak of rationality (and perhaps embarrassment), the Treasury department has rejected requests of Goldman Sachs and Berkshire Hathaway to purchase Tax Credits from Fannie Mae.

This paper transaction would have provided precisely zero value to the taxpayers, and allowed these firms to add to the piles of bailout monies already received by avoiding billions of dollars in taxes otherwise legally owed. It would have been a license to steal.

The sheer arrogance, the colossal gall involved boggles the mind.

And while we expect this sort of behavior from the Vampire Squid — they take pride at Goldman in not just being whores, but in being the highest paid callgirls in town — it is stunning to see such behavior from the usually politically astute Oracle Tentacles of Omaha. For Warren Buffett’s Berkshire Hathaway to team up with Goldman Sachs (which he now owns a healthy chunk of) is a bit of a revelation: We have been spun by his genteel manner, his aw shucks down-home-isms, his off Wall Street, less bloodthirsty approach to investing, into somehow believing he was different.

We have been duped.

We should not have been. Buffett has been the biggest shareholder in Moody’s — a collection of filthy whores and pederasts who were one of the main contributors to the economic collapse — should have raised serious questions as to his judgment in our minds. That he sat by silently as they did their worst, sodomizing the nations credit system for fun and profit was a powerful indictment of Buffett as someone far different than his public persona. In retrospect, as Moody’s was helping to destroy America’s financial system, his merely spouting off aphorisms about about Financial WMDs now looks too cute by half.

Those of you who used to respect Warren Buffett might consider moving him off your increasingly short list of participants in the marketplace who behave ethically. This crude attempt to steal billions — coming on the heels of the bullshit about “Investing in America” by buying Railroads — is a shock to me; perhaps that is a testament to my naivete.

Perhaps the Oracle of Omaha has been infected by a new flu variant, the H1N1 GS mutation.  It is usually non fatal to the host, but destroys its reputation . . .

>

See also:
Fannie Mae’s Sale of Tax Credits Is A Bad Deal, Treasury Says
Dawn Kopecki
Bloomberg, Nov. 7 2009

http://www.bloomberg.com/apps/news?pid=20601087&sid=adO7ckroZNOc&pos=6

Category: Bailouts, Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

61 Responses to “Treasury DKs Goldman/Fannie/BRK Tax Credit Scam”

  1. I wanted to work the phrase cocksuckers into this post, but I really couldn’t find the appropriate paragraph . . .

  2. MRegan says:

    Here’s another possible outbreak of reason:

    Einhorn: Greenlight Capital founder calls for CDS ban

    http://www.ft.com/cms/s/0/6b1945e6-caf9-11de-97e0-00144feabdc0.html?nclick_check=1

    As for Buffet, there was something fishy about his silver play back in 200? when he was forced to reveal a position he had been working to keep hidden. No one gets rich by hewing to Boy Scout’s Oath.

    From the wayback machine:

    http://www.pbs.org/newshour/bb/business/jan-june98/silver_2-25.html

    Jim Grant has some interesting comments in that interview.

    Warren Buffet showed that he could not be trusted by repudiating publicly his marriage vows. I cannot trust a man who will not honor a vow made voluntarily. Sorry, Warren, if you’ll cheat the person you promised to love and honor…who won’t you cheat?

  3. MRegan says:

    Finagling Financiers and their Felonious and Furious Fellatio Frenzy!

  4. call me ahab says:

    WOW BR-

    quite the invective!

    i’d like to think i could top you on your outrage-

    but i think you got me beat this time-

    most excellent!

  5. davver says:

    Is there any sort of surprise?

    Really, someone as smart as you should have figured this one out sooner.

    ~~~~

    BR: I please guilty — I wanted to believe in St Warren.

    Now, he is apparently just another asshole who works in finance.

    Like Greenspan, he seems to be hellbent on destroying his reputation

  6. MayorQuimby says:

    Good for you Barry. THIS is the side of you we like to see.

    BTW – are you going to address the following:

    “The Fed has been informed by dealers that they would be willing to
    enter into very sizable amounts of reverse repos with the Fed, if asked
    to do so, provided they could get some relief from Tier I capital
    constraints”

    from acrossthecurve.com

  7. Terry says:

    I admit to almost idolizing Buffet in the past but this is hard to reconcile with his interviews calling for a more fair tax code. I recall during the election last fall Buffet stumping for Obama and defending his proposals for tax increases on the wealthy by saying that he paid less in taxes then some of the administrative staff in his office. Maybe now we know how that happens.

  8. Mannwich says:

    Welcome back, Barry. Does this mean you’re also going back to the old blog design too? ;-)

  9. some_guy_in_a_cube says:

    Strong stuff BR.

    Indeed, the emperor is wearing no clothes.

  10. notsofastfriend says:

    Way to say as it is Barry. He will be known as the Tentacles of Omaha from this moment on. Bastard Buffet…

    ~~~

    BR: That is too good not to steal!

    I’ll edit that up top to reflect your turn of a phrase

  11. VennData says:

    Any US-tax-paying company that sells a depreciated asset to any other US-tax-paying company for more than the book value can also begin writing down the asset for tax purposes. This is just another of many examples of “the taxpayer” getting “ripped off.”

    I hate to sound like a “Greg the Republican…”

    http://www.huffingtonpost.com/andy-ostroy/the-sky-is-falling-the-sk_b_348275.html

    …but allowing people to engage in otherwise legal transactions is a higher principle than the anger a the Squid and the Oracle.

    I’m still down with the Oracle. Saying he was “cheating” on his wife or “going back on his vows” seems misleading in light of comments by his first wife, Susan.

    http://www.amazon.com/Snowball-Warren-Buffett-Business-Life/dp/0553805096
    http://www.forbes.com/2004/07/29/cz_rl_0729buffetobit.html

  12. Poke646 says:

    Buffet lost all credibility with me ever since CNBC got a hold of him…you have to watch what he does and pay no attention to what he says. If he’s buying ANYTHING for pessimistic reasons, he’ll always spin it as “investing in America” rah rah B.S. Buffet is as insightful as listening to Jared Berstein, Obama’s Economic advisor. Worthless.

  13. KidDynamite says:

    whoa Barry – it’s SATURDAY! relax!

    it seems you’ve finally stumbled upon an important realization – Warren Buffett is a capitalist! He’s not an altruist! people should keep this in mind when he writes op-eds in the Journal talking his book and explaining why the market is going higher (because if it doesn’t go higher, he’s on the hook for a bajillion dollars in payouts on the long term SPX puts he sold)

    ~~~

    BR: Ahhh, the fine red line between capitalist and scumbag.

  14. Poke646 says:

    I thought of a better analogy. Listening to Buffet for insights on the health of the American economy is like listening to Dick Bove for insights on the health of the banking sector.

  15. MRegan says:

    http://www.telegraph.co.uk/health/healthnews/6515742/Mind-blowing-sex-American-woman-suffers-amnesia-after-intercourse.html

    As for Buffet, VD, did you bother to read the Forbes (propaganda for the Wannabes) article? No attributed speech in that text- FAIL.

    As for the Amazon link, did you read the comments?

    Here’s a tidbit I found choice:
    [Enough is enough, though, and John Mark Eberhart of the Kansas City Star speaks for several critics when he points out, "I just could have done with a little less bang for my buck."]

    I don’t care about their understanding. That is their mishegoss…it is I who will not trust a man who cheats, whether or not he gets a long leash from his wife or not.

  16. dawase says:

    Hear, Hear!

    Seriously, for a while there, it was like the squid had put it’s blood-sucker right into the back of your head and co-opted you. Good to see you’ve regained control of your thought processes. Now if you could just share the secret of disentanglement with Congress and the Treasury, we’d really be cooking with gas!

  17. jeffg says:

    You mean to tell me that Goldman didn’t get exactly what it wanted from its puppet, the US Government? Did the puppet strings get tangled somehow? What is this world coming to? Isn’t that one of the “signs of the end” in the book of Revelation – that the Goldman lapdog actually shows some teeth? I am an ever so tiny less embarassed in our government today (at least until the House passes “health care reform”

  18. ga082003 says:

    So wonderfully put.

    I cannot agree with you more. What was so glad to read in this article was not about GS but rather about the devil hidden in the form of a saint, none other than the great grand old dad of investing. Right from my b-schools…the day I stepped into investing world, I have been the minority voice at almost every discussion about how mr. buffet is not what he seems. He is one of the faces of Rothschilds and the Rockfellars and a rather dangerous man. He is viper when compared to the GS who would be normal poisonous snakes.

    I do believe that the media and blogs had a role to play in treasury decisions else I think buffet would have got what he wanted. But this is only a small victory for us. There are many many grander schemes going on some of which may not be even visible.

    fresbee
    GA Alpha Fund
    Investing Contrarian

  19. jmf says:

    Moin from Germany,

    here is another excellent attempt from R.Winkler to “demask” the good guy image…..

    Buffett’s Betrayal
    http://blogs.reuters.com/rolfe-winkler/2009/08/04/buffetts-betrayal/

    He might be still agood investor but the rest is just spin……

  20. dougc says:

    What confuses me is his stated goal of donating almost all of his wealth to charity upon his death. You would think he wouldn’t want his legacy to be soiled as a duplicitous manipulator. Maybe he believes he will live forever or he’s lying about his goal.

  21. mister_x says:

    Wow, I don’t believe I have seen you this worked up lately. That was quite the tour-de-force!

  22. Mannwich says:

    @jeffg: They would have if this hadn’t been leaked out to the public. The fact that the likes of Goldman, Buffet, and our gov’ t remain clueless about public sentiment (e.g. just because it’s legal, doesn’t mean it’s ethical or “right”) and mood does not bode well for the future. This party’s just getting started.

  23. karen says:

    Bravo! Barry, Bravo! Encore, Encore!

    KD, this isn’t mere “capitalists” at work. The entities have a monopoly on gaming the system…

  24. Mannwich says:

    @dougc: Charity is the last refuge for scoundrels (religion being second to last).

  25. Mannwich says:

    Let’s see – Buffet buys stock in GS, WFC, GE. All get bailouts shortly thereafter. Now he buys BNI. Bailout coming for them too (however directly or indirectly)? Why bother even hiding this stuff anymore if they think they can get away with it? This is why, I believe they weren’t worried about buying these tax credits. They didn’t think anyone would notice or care about this particular robbery but the public sentiment and mood are turning quickly and the O administration must see that.

  26. bergsten says:

    Barry’s just pissed because he had to fly United.
    Doesn’t make him wrong though.

    ~~~

    BR: Northwest, who despite holding a 1st class ticket, would not grant access to the sky club (I got to the airport 3 hours before flight)

    Fuckers. I have an interesting rant about airlines coming next week

  27. Bruce in Tn says:

    Years ago, when I read of a typical Buffett Christmas, I knew this man and I shared little of the same DNA…I find him no different from many of the ultrarich…these people just don’t matter. They base their life on the acquistion of wealth, and that soon produces ennui in the rest of their life.

  28. Dan Duncan says:

    Consider his stake in Clayton Homes, which, in turn owns Vanderbilt Mortgage. This despicable group sells and extends loans on modular homes. These guys are far worse than any of the now defunct subprime operators.

    The level of despair and helplessness expressed by those who’ve had the misfortune of getting burned by Buffet’s residential real estate outfits is quite sad. Of course, the aggrieved are just working poor in a trailer park so nobody gives a shit, other than to find another way to make a joke at their expense.

    Nobody who claims to have the ethics and integrity that Buffet claims he has…. would be associated with, let alone own, Clayton Homes and Vanderbilt Mortgage. Nobody.

    And let’s not even get started on what is really a murky relationship between Berkshire’s General Re and AIG….Something about those dealings still stinks.

    But of course, this billionaire who was once roundly criticized for not giving away any money to charitable causes because it would “detract from shareholder value” did manage to do an about face right around the time his dealings with AIG were receiving the most scrutiny when he gave a shitload of money to his best friend’s Foundation. Just a happy coincidence.

  29. I pinged this post to Kass, who is short Berkshire, and Matt Taibbi, who could always use another good villain to unmask.

  30. ToNYC says:

    When the newly disenfranchised and highly-indebted generation wakes up to the fact that there is no there, there; the GS bunch will be desperately claiming under klieg lights that they were just following orders and Warren ah-shucks all-night Buffet will be buried buying back his SPX puts like a Jesse Livermore who listened to one more story about cotton when he knew better to just play the tape.
    Winter won’t be called off nor can Canute make the tide recede to save the sand castles. Get a ghillie suit Mr. Barry and stay up late for some good shots.
    All the money that the financial service pirates in fixed or equity insecurities extracted from the pension and IRAs of the masses in their Reaganesque charade will not insulate nor indemnify them from the Great Clawback that this wonderful little exercise in mean reversion is engendering.
    Don’t worry about saving the planet; it will survive the worst we could ever do after we’ve poisoned off our species. Good Night and Good Luck!

  31. bergsten says:

    @BR 12:03pm — Northwest, eh? Did they overfly SFO?

  32. Transor Z says:

    “I am a businessman. I am anything I need to be at any time. Tell me, what exactly are you?”
    -Pascal (Ian Holm) to Secondo (Stanley Tucci) in “Big Night”

  33. investorinpa says:

    BR, regarding pinging the post to Kass & Taiibi….just because Buffett is doing dubious things doesn’t mean his stock is headed down. I’ve been a long term shareholder, and much like yourself, believed in St. Warren, but saw the change over the years too. His business model and acumen still remains unmatched. I’m sure those wishing to short Buffett are likely to get screwed over because not only does he have companies that make money, but he also has the backing and support of the US Government & GS. Kass needs to find better opportunities. As far as Matt Taiibi goes, I love his writing, but there are more villains to uncover. If he goes after Buffett, he’ll probably face a backlash.

  34. Mannwich says:

    @BR: North-WORST is what we call them here. Hopefully Delta makes some changes for the better. Rates seem to be down though, and more flights courtesy of Delta’s presence here. Not sure if that’s the economy or the effects of the merger though. Maybe a little of both.

  35. bsneath says:

    BR – You also should have blown a little up the asses of the Treasury Officials who new this was bad for the taxpayer but approved it a month ago because it was good for their “constituents” aka Goldman Sachs and Buffett.

  36. Mannwich says:

    @investorinpa: Whoever said anything about shorting Buffet here? I don’t think anyone is dumb enough to short anyone or anything that has the now EX-plicit backing of the USG ad infinitum.

  37. Mannwich says:

    Another good investment by the feds on behalf of We the Sheeple.

    http://www.calculatedriskblog.com/2009/11/tarp-loses-299-million-investment-in.html

  38. investorinpa says:

    Mannwich, Barry had noted in his last reply that Doug Kass was shorting Berkshire. “I pinged this post to Kass, who is short Berkshire, “

  39. Mannwich says:

    @investor: That’s right (my bad). I was referring to folks here at TBP, so I guess we’re both “right”. Mea culpa.

  40. bsneath says:

    Why do you suppose the New York Times elected not to name Buffett?

    http://www.nytimes.com/2009/11/07/business/07fannie.html?ref=business

  41. DeDude says:

    I thought trying to pay less taxes was the all time favorite American passtime. Personally I never did consider Buffet to be clean, just less dirty than the average. But Fannie Mae mangers better find the right answer to the question of whether they are to serve their largest shareholder or their company.

  42. gstream says:

    Time to buy Berkshire. This unanimity of resentment is too much to go unnoticed.

  43. DeDude says:

    Ultimately this is no different than what public transit authorities have been doing forever. Its just that the mood and the times have changed.

  44. rustum says:

    I was very impressed by WB quotes and articles. Equally impressed by Charles Munger quotes. Perplexed why he is holding financials and GE all along.
    Surprised by the decision of Treasury. The didn’t play the ball with squid. I guess first good decision by administration.

  45. bsneath says:

    You are right about that DeDude. The taxpayer has been getting screwed on the transit tax credit deals for years. Maybe this will stop too.

  46. DeDude says:

    bsneath; it may stop – if not for any other reason than that some of these transits have been strangled in the wicked webs that the financials have been making with and around them ;-)

  47. Moss says:

    So why not let an individual write-off, against ordinary income, a loss on the sale of a home for example.
    To be this is just another example of Corporate Communism. Also see:

    >http://www.tradingmarkets.com/.site/news/Stock News/2633335/

  48. John Clarke says:

    This is what I enjoy most about your blog Barry. Calling out the Circle Jerk Lovefest that continues to permeate between our (so called) elected leaders, WallStreet (and the Financial News Media) with well reasoned arguments (even if I don’t necessarily agree with all of them)– but with No Punches Pulled.
    I had ‘hoped’ we would get some change (we could believe in) with this new administration, so far as the regulatory environment was concerned with the banks– and accountability through tougher accounting standards. Instead all we have received is more of the same that began under ‘W’ orst.
    I should think that in another life (or a Clunk on the Head) you would have made a pretty respectable fighter in the UFC.

  49. Space_Cowboy_NW says:

    BR: “Fuckers. I have an interesting rant about airlines coming next week”

    Luckily you were not on the Delta flt (red eye from Rio) that landed on the taxiway M @ Atlanta
    http://www.cnn.com/2009/US/10/21/georgia.taxiway.incursion/index.html

    Could have been a real diaster had someone (cleared by ground control) been making their way
    to the active (runway), jmho…but someone/at some level called in some favor to bury this as to protect
    something. ATC/Tower was aware/complict in the incident (once cleared to land you are on visual by someone in the tower).

    Somehow the NW overflight blew this off the 24 hr news cycle…go figure

    Regarding St. Warren: there are two way ones aquires great wealth: 1)whatever you are doing is illegal, and 2)you are screwing someone. Third option is …you already know!

    Regarding reputation(s): “When the legend becomes fact, print the legend.”

  50. Darkness says:

    BR: Ahhh, the fine red line between capitalist and scumbag.

    You mean the fine line between capitalism and a kleptocracy.

  51. Jessica6 says:

    I think the intent is largely to keep up that great American myth of the self-made man – that it’s okay for there to be Billionaires while millions live in poverty because everyone has a shot. You just have to work hard and be just a little smarter than the next guy.
    Everybody hears about how Bill Gates was hired on before he even graduated University – such the genius he was – but less about how his mother was friends with one of the executives at IBM…

    I’ve been wondering if the purchase of Burligton Northern had more to do with a bet on future ‘infrastructure’ stimulus spending such as high speed rail. The track owned by Burlington, if Wiki is correct, sure is extensive.

  52. bmoseley says:

    he’s always been good at self-serving statements to the press and public. the first clue that i had that all was not well was the ‘disclosure’ about the governance of Berkshire: he and a couple of pals ran it. this back when he was making comments about other companies with poor governance situations.

  53. JoWriter says:

    My first clue that he was not all he seemed was when he was giving candidate Ahnold, now Gov. Ahnold,
    advice to raise taxes. He (WB) made some comment regarding property taxes that I immediately checked out by called the county assessor in Omaha – wrong. He was making it up – whatever it was, I forget now.

    The other clue, of course, is that he is a F**king Socialist! Capitalist, my foot. I’m sure he gets along ever so well with Soros – birds of a feather, including the personal betrayal part. Ugh. *spit*

  54. AS says:

    ‘”We have been duped””

    Right on, man.

    Excellent piece.

  55. Aeroscout840 says:

    It is a post like this that keep me checking TBP twice a day. Bravo, BR.

  56. [...] The sheer arrogance, the colossal gall involved boggles the mind. And while we expect this sort of behavior from the Vampire Squid — they take pride at Goldman in not just being whores, but in being the highest paid callgirls in town — it is stunning to see such behavior from the usually politically astute Oracle Tentacles of Omaha. For Warren Buffett’s Berkshire Hathaway to team up with Goldman Sachs (which he now owns a healthy chunk of) is a bit of a revelation: We have been spun by his genteel manner, his aw shucks down-home-isms, his off Wall Street, less bloodthirsty approach to investing, into somehow believing he was different. We have been duped. We should not have been. Buffett has been the biggest shareholder in Moody’s — a collection of filthy whores and pederasts who were one of the main contributors to the economic collapse — should have raised serious questions as to his judgment in our minds. That he sat by silently as they did their worst, sodomizing the nations credit system for fun and profit was a powerful indictment of Buffett as someone far different than his public persona. In retrospect, as Moody’s was helping to destroy America’s financial system, his merely spouting off aphorisms about about Financial WMDs now looks too cute by half. There are several other takes from around the web, including the blogs at such mainstream news organizations as Reuters, but these are the two I recommend starting out with: Warren Buffett Shredded (Fund My Mutual Fund)   Treasury DKs Goldman’s Tax Scam  (The Big Picture) [...]

  57. [...] two posts by Barry Ritholtz unmask Warren Buffett. He is scathing in his comments. Regardless of the tone and [...]

  58. The Curmudgeon says:

    Kudos, BR. I’ve nothing else to add.

  59. JackOtter says:

    Whenever Buffett invests in a company that I own, I’m pleased, because it tends to bolster the price, I know he’s likely to stick around for the long term, and I like knowing that the CEO might just be able to get Warren on the line. Since the government forced me to become an owner of B of A, Goldman, and the other names, I’m glad that Buffett put some of his money in my inadvertent investment. It’s one thing to criticize the government for making that investment with our money in the first place. It’s quite another to criticize Buffett for a.) realizing which way the wind is blowing, and b.) increasing the odds that we all get a return on our investment.
    That said, Buffett’s stake in Moody’s does leave a bad taste in the mouth.