2010: What are Buffett's thoughts on Goldman Sach's troubles?
ANDREW ROSS SORKIN: I’ve received over 300 questions just related to Goldman Sachs, and I know we’ve covered it already but there are a couple outstanding questions and one individual sent three specific questions that I thought I’d ask.
The first is, since Berkshire is a Goldman shareholder, who would you like the see run Goldman Sachs if not Lloyd Blankfein?
Were you made aware of Goldman’s Wells notice, or anything about the case, prior to it being brought?
Do you think the Wells notice constituted material information and should have been disclosed? Would have you disclosed it?
And finally, have you been contacted as part of the Galleon investigation and the allegation that a Goldman Sachs board member passed inside information about your pending investment in Goldman in 2008 at the height of the crisis to Galleon?
I know there’s a lot of pieces to that, but I thought we’d get Goldman out of the way —
WARREN BUFFETT: OK, good.
ANDREW ROSS SORKIN: — right now.
WARREN BUFFETT: Good. Yeah. Well, let’s answer the third one first.
We’ve not been contacted in any way about Galleon. I read about that in the paper and the allegation, apparently, of a contact between a Goldman director and Galleon.
And I think in one of the stories, I read something about, presumably, Galleon trading on it. But the answer is no contact from anybody. And I can’t pronounce the name of the guy that runs Galleon. (Laughter)
The Wells notice, I’ve talked to a number of lawyers about that. And I think — when we got a — we didn’t get the Wells notice, but when the Gen Re executives got the Wells notice, I’m quite sure we stuck that in the 10-K or 10-Q that came up.
And maybe we filed an 8-K announcing it. That was not us receiving it ourselves but certain executives receiving it.
I have been on the board of at least one well-known company over the past 40 years, and I won’t narrow it down any more than that.
But before, they received a Wells notice and they didn’t publicize it, and, in truth, it was nothing. So lawyers tell me that if you regard it as material, you report it.
I don’t think if I’d received something relating to the ABACUS transaction, based on what I know about it, I would have considered it material to a company that was making many, many, many billions of dollars a year.
Charlie?
CHARLIE MUNGER: Well, I wouldn’t have regarded it as material, either.
If every company reported every little thing that might happen with what they regarded a tiny probability, we’d just have unlimited confusing reports.
There has to be some materiality standard. And you don’t want to give blackmail potential to people that are mad at you and make claims. I’m not saying that’s what the SEC was doing, but —
WARREN BUFFETT: No, but it could happen with a lot of — (laughter) it could happen with individual —
CHARLIE MUNGER: It could happen with other people, yeah.
WARREN BUFFETT: And I know what percentage of Wells notices result in something that’s material to the company. But my guess is that there are plenty of them that wouldn’t be.
And of course, the bigger the company, the less likelihood that it would be material.
And then your other question about who I would want running, if Lloyd wasn’t running it?
I guess if Lloyd had a twin brother, I’d go for him. But I’ve never given that a thought.
We think about who would run Berkshire — (laughs) — but there’s really no reason to think about that.
There wasn’t any reason to think about, in my view, back in 1970, when they had the Penn Central problem whether somebody other than Gus Levy should be running Penn Central — be running Goldman.
And when the event happened in connection with the Boskey thing, John Weinberg was running it then. And I thought that John Weinberg was a terrific manager of Goldman.
So I just don’t see this as reflecting on Lloyd.
I think, as Charlie — and we’ve got strong feelings. There’s plenty of stuff goes on Wall Street that we don’t like. But we do not think it’s specific — we know it isn’t specific — to Goldman.
Charlie?
CHARLIE MUNGER: Well, there are plenty of CEOs I’d like to see gone in America. (Laughter)
But Lloyd Blankfein is not one of them.
WARREN BUFFETT: OK, number 3. (Laughter)
I was afraid he might start naming names. (Laughter)