Berkshire Hathaway Inc. Chairman Warren Buffett's $5 billion investment in Goldman Sachs Group Inc. a model says Carlos Slim
Mexican Billionare who already owns part of New York Times and Sack's Fith Avenue gives his opinion on how to rescue ailing banks.UPDATE:
"Buffett did this after Goldman converted to a bank holding company," said Pat Dorsey, director of equity research at Morningstar. This means the Federal Reserve will be Goldman's new regulator, so Buffett "has people looking over their shoulder," he added. "Buffett is saying that, with less leverage and more stable sources of funding, this is an institution worth investing in," according to Dorsey. "From Buffett's perspective, you have a world-class firm in a less-competitive landscape with a hopefully less-risky business model."
Carlos Slim Helu, the world's second-richest man, said Berkshire Hathaway Inc. Chairman Warren Buffett's $5 billion investment in Goldman Sachs Group Inc. may serve as a model for other ailing banks.
``This type of plan is the one banks are going to follow and it's the right road for a financial rescue,'' Slim, 68, told reporters during a luncheon meeting in Mexico City.
Goldman Sachs rose 6.4 percent on Sept. 24 after Buffett said he would buy $5 billion of preferred stock and warrants to buy another $5 billion of common shares. The investment followed the collapse of Lehman Brothers Holdings Inc. and a 24 percent slide in Goldman shares in September at the time.
Slim, whose wealth Forbes' estimated at $60 billion, said governments should buy stakes in banks instead of purchasing their troubled assets. The U.S. Congress yesterday rejected a $700 billion proposal to purge bad mortgages from financial companies' balance sheets.
``Buying assets is complicated because you have this problem of which ones you select,'' said Slim, who owns America Movil SAB, Latin America's largest mobile-phone company; Telefonos de Mexico SAB, the country's biggest land-line operator; and Grupo Carso SAB.
Berkshire Hathaway Inc. Chairman Warren Buffett toppled Bill Gates from the top spot on Forbes magazine's annual list of billionaires worldwide, ending a 13- year reign for the Microsoft Corp. co-founder.
Buffett's wealth grew $10 billion to about $62 billion in the 12 months through Feb. 11, mostly from a gain in his company's shares, Forbes said in a statement.
The fortune of Gates, 52, rose $2 billion to $58 billion. The Microsoft chairman fell to third on the list behind Mexican telecommunications mogul Carlos Slim, 68, who has an estimated net worth of $60 billion.