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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Les H who wrote (142395)8/22/2008 1:12:28 PM
From: Les H of 306849
 
Freddie Mac courts investors, Buffett passes

Warren Buffett acknowledged during a live appearance on CNBC Friday that he had been approached by Freddie and Fannie and passed on getting involved. The timing of the incident was not immediately clear.

Buffett's company Berkshire Hathaway Inc. was the largest Freddie shareholder around 2000 and 2001, he said. The company sold its shares after Buffett realized that both companies were trying "to report quarterly earnings to please Wall Street."

Buffett said he believes the federal government will have to step in because the pair's troubles seem to be growing and feeding on themselves. Losses between April and June for the two totaled $3.1 billion as defaults in their portfolios mount. The pair hold about half of outstanding U.S. mortgage debt and are the largest source of funding for home loans.

"They're looking for help, obviously. And the scale of help is such that I don't think it can come from the private sector," Buffett said.

Investors appear to believe existing common stockholders would get nothing if there is a government bailout, a view Buffett also shares. What remains unclear is whether investors in preferred shares -- a type of investment that incorporates elements of both stocks and bonds -- will also be wiped out.

biz.yahoo.com
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