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Warren Buffett, the Oracle of Omaha and one of the world's richest men, tries to provide some much-needed political cover for officials in both the Obama and Bush administrations for stepping in to save the nation's financial system when it couldn't save itself.
In a New York Times op-ed piece wryly styled as an open letter from an appreciative nephew to his Uncle Sam, Buffett argues that much of the U.S.' financial infrastructure was near collapse when the federal government took extraordinary efforts to rescue it, using taxpayer money to prop up the system until the immediate crisis passed.
When the crisis struck, I felt you would understand the role you had to play. But you’ve never been known for speed, and in a meltdown minutes matter. I worried whether the barrage of shattering surprises would disorient you. You would have to improvise solutions on the run, stretch legal boundaries and avoid slowdowns, like Congressional hearings and studies. You would also need to get turf-conscious departments to work together in mounting your counterattack. The challenge was huge, and many people thought you were not up to it.
Well, Uncle Sam, you delivered. People will second-guess your specific decisions; you can always count on that. But just as there is a fog of war, there is a fog of panic — and, overall, your actions were remarkably effective.
I don’t know precisely how you orchestrated these. But I did have a pretty good seat as events unfolded, and I would like to commend a few of your troops. In the darkest of days, Ben Bernanke, Hank Paulson, Tim Geithner and Sheila Bair grasped the gravity of the situation and acted with courage and dispatch. And though I never voted for George W. Bush, I give him great credit for leading, even as Congress postured and squabbled.
No question knows what he's talking about when he discusses how dangerous the situation was. Before investment bank Lehman Brothers sank beneath the waves, Buffett was approached by Lehman to see if he would make a significant investment in the firm and by lending his magical name, boost confidence in its future.
After looking at the disastrous state of Lehman's financials, he declined. When federal officials declined to bailout Lehman, the company filed for bankruptcy protection and was liquidated which caused the credit markets significant damage global financial markets have yet to fully recover from.
There's one noticeable omission in Buffett's letter. While he has supported President Obama and served as one of his outside advisers on financial and corporate issues, Buffett doesn't mention the president at all though he mentions his predecessor. There'll likely be a lot of talk about that.
Not a few Democrats and even some Republicans probably wish Buffett would have come out before the midterm elections with his praise for the bailouts. But Buffett might have not wanted to be seen as trying to influence the elections.