Billionaire investor and Moody’s stakeholder Warren Buffett spoke to FOX Business Network’s (FBN) Liz Claman ahead of his testimony on the ratings agency’s role in the financial crisis, saying “I don’t think they are the major responsibility” but that he regrets not selling the agency a couple years ago.
Excerpts below:
**Mandatory Credit: FOX Business Network**
On whether he regrets owning Moody’s:
“No. I regret not selling it a couple years ago. They didn’t see it coming, I didn’t see it coming.”
On lack of price flexibility with the ratings agencies:
“In a sense states have done that already. Actually, the banking authorities have done it. There has been a mandated rating arrangement and that’s the reason we have no price flexibility.”
On whether the ratings business model should be changed:
“It’s pretty hard to change it. It’s not very feasible to have the people who buy triple A bonds one by one -- $10,000 bond here, $5000 bond -- to make them pay for it.”
On Moody’s:
“We are forced to use it in terms of our own ratings. I don’t use it in terms making my own credit judgments. Moody’s basically earns extraordinary returns on investment capital, it has the freedom to price, and it’s got a wonderful business.”
On whether the ratings agencies are responsible for the financial crisis:
“No, I don’t think they are the major responsibility but I think they participated in it just like everybody else that had this notion in their mind that house prices couldn’t go down.”
On why he had to be subpoenaed:
“I’ve had requests from eight congressional panels that they have authorized in that last 12 or 15 months. If I went to one without a subpoena, I’d have a hard time explaining to the other panels why I don’t show up in Washington. I’ve always offered with any of these panels to come.”
On feeling somewhat responsible in helping unwind the financial system through Moody’s:
“No I don’t think so. I don’t think smoking is good for you but I hold cigarette bonds.”
On Goldman Sachs:
“No [I do not regret buying Goldman Sachs].”
On whether he knew about Moody’s pressure on employees to give better ratings:
“No I never heard of it. I would doubt it because in effect, I need Moodys and Standards & Poors. They don’t have to kowtow to anybody.”
On whether the world is broke:
“No, the world is going to do fine. “
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Excerpts below:
**Mandatory Credit: FOX Business Network**
On whether he regrets owning Moody’s:
“No. I regret not selling it a couple years ago. They didn’t see it coming, I didn’t see it coming.”
On lack of price flexibility with the ratings agencies:
“In a sense states have done that already. Actually, the banking authorities have done it. There has been a mandated rating arrangement and that’s the reason we have no price flexibility.”
On whether the ratings business model should be changed:
“It’s pretty hard to change it. It’s not very feasible to have the people who buy triple A bonds one by one -- $10,000 bond here, $5000 bond -- to make them pay for it.”
On Moody’s:
“We are forced to use it in terms of our own ratings. I don’t use it in terms making my own credit judgments. Moody’s basically earns extraordinary returns on investment capital, it has the freedom to price, and it’s got a wonderful business.”
On whether the ratings agencies are responsible for the financial crisis:
“No, I don’t think they are the major responsibility but I think they participated in it just like everybody else that had this notion in their mind that house prices couldn’t go down.”
On why he had to be subpoenaed:
“I’ve had requests from eight congressional panels that they have authorized in that last 12 or 15 months. If I went to one without a subpoena, I’d have a hard time explaining to the other panels why I don’t show up in Washington. I’ve always offered with any of these panels to come.”
On feeling somewhat responsible in helping unwind the financial system through Moody’s:
“No I don’t think so. I don’t think smoking is good for you but I hold cigarette bonds.”
On Goldman Sachs:
“No [I do not regret buying Goldman Sachs].”
On whether he knew about Moody’s pressure on employees to give better ratings:
“No I never heard of it. I would doubt it because in effect, I need Moodys and Standards & Poors. They don’t have to kowtow to anybody.”
On whether the world is broke:
“No, the world is going to do fine. “
