2012: Could Berkshire be regulated as an investment company?

Jay Gelb: On the subject of regulation, a question I often get from investors is, what are the implications if Berkshire ends up being subject to the Investment Company Act of 1940 because of insurance becoming a smaller part of Berkshire’s overall business?

Warren Buffett: I don’t — I may be —

Charlie Munger: That’s too remote. That’s not going to happen.

Warren Buffett: Yeah. I used to — I read the Investment Company Act of 1940 probably 20 times because it was quite pertinent when I was setting up my partnership and all that. I don’t remember every detail now, but I see no way that — that Berkshire comes close to that. We used to worry about both personal holding company status and investment company status, but we steered — we made very clear that we steered clear of both of those. But now — I think we’re a million miles away from it now.

Charlie Munger: Yeah, we really need the financial heft we have to make our basic businesses work. We are not just an investment company.

Warren Buffett: Yeah. We’ve got 270,000 employees. We own 8 companies that each would qualify for Fortune 500 stand-alone. So it’s — people thought of us as an investment company long after we were nothing remotely —

Charlie Munger: Like one.

Warren Buffett: — like one, and where we had no intention of going in that direction. But the background of both of us caused people to hang on to that notion longer than it was appropriate.