Last week, on the front page of The New York Times‘ business section, columnist Andrew Ross Sorkin applauded Warren Buffett’s spin on the Securities and Exchange Commission‘s suit against Goldman Sachs. “What’s all the kerfuffle?” Buffett said in essence at last weekend’s Berkshire Hathaway annual meeting. It was a particularly notable assessment given that Berkshire holds $5 billion in Goldman Sachs Group, Inc. preferred stock.
In Buffett’s view, the infamous Abacus transaction — in which Goldman allegedly allowed hedge fund short-seller John Paulson to influence the selection of reference mortgages for a doomed collateralized debt obligation that Goldman sold to other clients — was covered by the “Big Boy” rule of Wall Street: We’re all sophisticated investors here, and we can look out for ourselves. If you mess up and lose your shirt, don’t whine. “In his trademark way,” wrote the Times’ Sorkin, “[Buffett] made a plain-spoken case that makes sense.”
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