OtherThree generations of Buffetts are with me.Warren Buffett is a chairman and CEO of Berkshire Hathaway and a longtime friend of mine inthis program.His genius as an investor has made him one of the world's wealthiest men.He pledged to give away most of his fortune and donated $31 billion to the Bill and MelindaGay Foundation in 2006.He's also encouraged his children to engage in philanthropy.Warren Buffett's son, Howard Graham, is the chair and CEO of the Howard G. Buffett Foundation.He's also the author of a new book.It is called Forty Chances, Finding Hope in a Hungry World.His son, Howard Warren Buffett, is a lecturer at Columbia University and a trustee of hisfather's foundation.He has contributed to the book with his own experiences in policymaking and philanthropy.So I'm pleased to have all of them here together at this table for the first time.Grandfather, son, and grandson.So how does it feel here?
WarrenIt feels great.
OtherIt really does, doesn't it?
WarrenYeah.
OtherYeah, I'm very proud of him.Let's talk about that in your introductory remarks.So let me just start with the book, clearly, because I knew your mother and understoodhow what's involved here is what you have learned, but also what you learned in additionfrom them.Give me a sense of what it was that you were trying to accomplish with Forty Chances.
QuestionerWell, you know, both my mom and dad were phenomenal in terms of the opportunity they've givenme and my brother and sister.And in my case, I've spent a lot of time traveling around the world, met a lot of people, seena lot of things.And I just felt that, you know, those experiences are something that hopefully are worth sharing.I start out with the idea of doing a textbook and how he told me, he says, Dad, you haveto think a little bigger than that.So I just thought that, you know, sharing some of the experiences and, you know, we'vetried a lot of different things and we've failed more than we've succeeded.And I just feel like that's an important message.You can learn from failure.
OtherAbsolutely.
QuestionerYeah.Why the title Forty Chances?
OtherWell, I was going to something that most of your viewers will not get too excited about.It's called Planter's School, and it's you go in the wintertime, you go to the John Deeredealership and sit down and different speakers will try to tell you how to improve how youdo in the crop.And, you know, he kind of talked about how you only really have 40 seasons for 40 growing
Questionerseasons to do the best job you can.And I kind of then translated that into thinking about, well, you really have about 40 reallyprime years.I was joking.So he has 80.Yeah.I missed that.Yeah.But, you know, a little ever ready battery.But, you know, the truth is most people have, you know, in their prime, they have about40 years to really change things or achieve their goals or whatever they want to set theirsights on.You still consider yourself first and foremost a farmer.I love it.Yes.Yeah.I never want to give it up.When you were last here and we talked with Warren, you said you were in the middle ofa transition to impact decision makers more effectively.Is this book the culmination of that?
OtherThe book is a big part of that.Yeah.I learned a lesson, particularly working in conflict areas and areas where you reallyhave to have government engagement that, you know, if you don't if you don't impact policy,you know, if you're if you're working, you can have great people, but if you're workingunder really poor policy, they're not going to succeed.So we really started to embrace advocacy as part of our tool.Yeah.And you believe that we can do a significantly better job at trying to eliminate poverty.Absolutely.I think one of the things is we've we've we've been living too much in history and, you know,technology has changed.But also, I think thinking has to change and thinking is changing.I mean, you know, the younger people in philanthropy today think differently.They're more innovative.I think they're more focused.And those those people that are thinking and driving that way, I think have to help changesome of the bigger organizations.
QuestionerI'm amused at what Warren once said, that it's much better if you give away your moneywhile you can make the decisions before you're 90 and drooling with a blonde sitting on yourlap.
OtherI'd like to try that, though, too.I think I got the drooling part now.Where's the blonde?
QuestionerThere is also your mom and as everyone, I think, knows, we did a wonderful conversationwith her before she died.And here is an excerpt of that in which we see her and her impact on the family.Here it is.
OtherI think he he hopes that people remember how much he liked to talk about the ovarian lottery.He does that.And I, I believe that so deeply, like he does, and if he can make young people realizeI'm lucky I was just born here and then take it a step further.And what can I do for people who aren't so lucky, including people here?
QuestionerI know that means a lot to him. So you say this, Warren, in the introduction in this ovarian lottery, my children received some lucky tickets. Many people who experienced such good fortune react by simply enjoying their position in life and trying to ensure that their children enjoy similar benefits. This approach is understandable, though it can become distasteful when it is accompanied by smug. If I can do it, why can't everyone else attitude emphasize or help us understand the significance of the ovarian lottery? Because it says something about how lucky we are to be born in this country.
WarrenYou're Charlie. I was born in this country and the odds were 30 or 40 to one against it when I was born in 1930. If I'd been born someplace else, my life would have been nothing like it's been here.
QuestionerYou wouldn't be allocating capital.
WarrenNo, I wouldn't. You'd be chased by it. If I were wandering around in Bangladesh saying I allocate capital, I'd say get a job, buddy. So I was fortunate with my parents. I was fortunate at the time I was born. You know, I happen to be wired in a way that works very well on a big capitalistic system. So I've had all kinds of good luck. My life could have been, you know, dramatically different. But because other people haven't had that, they did not benefit from the ovarian lottery.
QuestionerAbsolutely. Obama got a certain amount of criticism when he said, you know, nobody did this alone.
WarrenWell, I don't know about other people. I did not do it alone. I mean, there are 10,000 crosses over there at Normandy that enabled me to be where I am today. They're people of Gettysburg. I mean, none of us do it alone. And I've been very, very lucky to be sort of designed for this time and this place. But a lot of people aren't lucky. And the market system showers things on me. And it leaves an awful lot of people behind.
QuestionerI should take note of the fact that son and grandson are named Howard.
QuestionerYeah. Your dad was named Howard as well. You're a hero in life.
WarrenAbsolutely.
QuestionerYeah. But the idea is that you can do what if our goal is to eliminate poverty to a large extent? What's the steps that we ought to take? And I'll bring in your son in a moment.
WarrenYeah. I think part of what I try to write in the book is use our experiences to talk about some of those answers. I think when philosophy kind of clashes with reality, which is what we've seen in our Congress recently, you know, reality, those people in living reality kind of lose.
OtherAnd so, you know, we need to have more serious leadership in terms of addressing this issue.So when people talk about cutting the SNAP program, you know, those people don't sufferthe consequences from that action.And they need to understand who does suffer those consequences.So really awareness and advocacy are a key thing in terms of the policy.And then, you know, another thing we need to do is we I always say, you know, historicallybusiness has been kind of the bad guy and in philanthropy, you know, people have lookedat it and said, well, you know, I can't they're doing this or they're doing something.So I can't really partner with them.The truth is businesses create jobs and jobs are what permanently bring people out of poverty.Now, it's not that simple in a lot of cases, but we have to have a different mindset aboutwhat some of the solutions are.
QuestionerTell me about you and what you've learned and your role in this book.
OtherWell, I'm just honored to be involved.And over the last 15 years, I've been able to travel with my dad around the world andtake in so many experiences.And that's part of what we've tried to capture in 40 Chances.But for me growing up, I have had the two most incredible role models anyone could askfor.And, you know, we sit around at Dairy Queen at Family Brunch and have conversations.But there's there's still unbelievable individuals.You know, my grandfather built what was one of the world's greatest fortunes and turnedit into one of history's greatest gifts.And in doing that, he empowered my dad to try and change the world.And and that opportunity is what my dad has used and shared with me to try and improvelives everywhere.
QuestionerTell me about your visit to Prague in 1969.
OtherYeah, that was that was a big change in my life and one of the best things I ever did.And I wouldn't I wouldn't got it done if it wasn't for my dad, because my mother did notwant me to go.And I still argue and argue.Yeah, I mean, you know, I had no concept of what was going on in Prague.I just know that Vera, who was it, stayed with us as an exchange student and come onover.So I said, I want to go over.And, you know, I'm flying in.It's one of those cases where the mood changes quite, quite quickly because I'm flying inand I'm looking at, you know, I love big, big machines and you're landing and you'vegot all these tanks and all this.This is really cool.Then when I'm standing face to face with the soldier who's looking for my visa, I'm going,
Otherwell, this is not so cool.And so, you know, but I learned so much.You know, I didn't get three meals a day.We had we boiled hot water on Sundays to take a bath.I mean, you know, it was just so different.And you saw people who were subdued, people who were beat up by secret police.I mean, I saw all this and to see it is different than reading a book.And so it really changed.You know, it's the first time I felt helpless and that I felt like I really should be doingsomething, but I can't do anything.And I think, you know, later on in life, that really stuck with me.
QuestionerWhat is it that makes you proud?
OtherWell, I'm proud of all three of my children, but they but they don't have to do what they'redoing. I mean, they they don't they don't have unbelievable amounts of money, but theyhave enough so they could they could spend their time at a country club or somethingof a sort. And then and instead, I don't know how many countries he's been in, but but heis he is he's trying to help his fellow human being.And fortunately, I've got some money that can help him do that.But but the energy and the imagination and learning from mistakes and all of that belongsto him.
QuestionerOne other thing you have, other than the sort of instinct for farming andagriculture and experience and learning is photography.And we'll see a couple of things here, several things.Tell me your wife introduced you to cameras.
OtherYeah. Yeah.
QuestionerAnd what did it do for you?What did it turn?
OtherI think it for one thing, the first thing she would tell you is it taught me some patience.You know, if you want to get a cheat on a kill, you have to wait, you know, and shedoesn't know about waiting for you.
QuestionerNo, that's exactly right.There's no remote control that you get.
OtherYeah. So it did.It taught me some patience. But I, you know, I just saw I started seeing things, you know,on the farm originally that I just kind of wanted to capture.And then when I started traveling and originally we did a lot in conservation.So it was a lot of fun, you know, elephants and cheetahs and lions and all those thingsthat kids like to see.And we all love.But, you know, then I learned that photography is a really powerful tool to change people'sminds, to make them you can't if you get a strong enough photograph, people can't turnaway from it. You can't deny that it's happening.And so to me, it's it's I think I write in the book, if I remember right, that it's like
Othera truth gun. I mean, it's just, you know, it it really forces people to deal with thereality. As somebody said, effectively, the picture is worth a thousand words.
QuestionerYeah, absolutely.
OtherOK, take a look at some of these.
This is a I want you to describe the photograph.
This is a emaciated veteran saluting a flag.
QuestionerYeah, this is Everett. This is Everett in West Virginia.
Everett was one of those circumstances where I had not gone to, you know, reallyphotographs ever.
But we saw him. He came out to get his mail and I saw his ribs and I knew he'smalnourished. And so we turn around and went back.
And that picture is really interesting because I was on the other side of a very busyroad waiting to cross.
My colleague had already gone up.
She's standing at the bottom of the stairs there.
And I yelled across the street.
I said, ask Everett if he's a veteran because he had the flag.
And immediately what he did was he saluted.
And then we spent quite a bit of time talking to him.
But he's an example of somebody who served this country and hasn't been treatedfairly. Here's a picture of a boy you photographed in Senegal who's unchanged.
QuestionerYeah, this is where my camera almost got me a lot of trouble.
We got in. I was able to take one camera.
It was amazing. We got into this area.
There's about 40 or 50 young boys in shackles and chains.
And they basically are caught in a religious system that their parents give a childto the Marabou, who is the head of the religion there.
And basically those children beg for money.
If they don't get enough money on the street, then they're treated like this.
OtherOK, the third slide is a picture of a woman in Armenia, 82 year old Anna.
This is Anna. I think how I should tell you this story.
Well, you know, we've been driving through the countryside in Armenia for hours atthis point. And I think almost by happenstance, we we stopped at this house and wewere invited in by Anna.
And she told her story about her sister, who is mentally ill, that she had to lock upat night because her sister tried to kill her.
And what you're seeing is you're seeing her standing in both her kitchen and herbedroom and her porch all at once there.
And it was one time that that I had an incredible difficulty with it, becausewhatever it was about the situation, it just it hit me so hard emotionally.
And, you know, my dad and I have seen indescribable instances around the world.
And Anna's story just touched me in a way I was not expecting.
WarrenIf I could just add really quickly, I told Howie, we're in South Africa.I said on the way home, we're going to go to Armenia.And he says, Dad, I don't want to go to Armenia.What's in Armenia? And he really didn't want to go.And I said, you know, I just was there.That's why you didn't come out there.And and I said, no, I said, you're going to see something you've never seen.I've taken him to Bangladesh and India and all over Africa and Central America.And what I wanted him to see was a society that when you talk to people, you know,this is this was a situation where people had had good jobs.We talked to professors who were out of work.We you know, they've lost cars.They've lost houses.They can't send their kids to school anymore.It's a very different environment than what we see in a lot of the countries we work.And I wanted him to have that experience.I think that's been one of the things that Bill and Melinda Gates have done is to traveland firsthand experience with their own eyes and their own, you know, visit.
QuestionerYeah. Yeah. You can't you can't sit in a building on Park Avenue and really understand this.Yeah. You believe what ought to be the debate about philanthropy now, because a givenpledge has elicited some of that people step forward and they're having meetings as partof that in which they try to understand how to give more effectively.But do we need a bigger debate about philanthropy and and how it can be applied and andand why you should be engaged?
WarrenWell, philanthropy does not operate with a market system.I mean, when we sell deli bars at Dairy Queen, we soon learn why the people like deli bars.The market system is wonderful in terms of the feedback.It gives you ideas and products and all of that.And philanthropy, you know, if you're handing money to people, they're going to say, keephanding it one way or another and they'll flatter you and do all kinds of things.So you get you do not have a market system test.And that that makes it much more difficult.And you can do the wrong thing for a long time and nothing will stop it.So it it requires it requires more ability than business.Do we have it requires more ability to give money away than make it?Oh, absolutely. Absolutely.No, no comparison.In fact, that's why you gave the money to Bill and Melinda Gates, because you and thechildren and the children, because you were admiring of the fact that you could be
Warreneffective, the energy they would bring to it, the intelligence, the lifelong commitment.I mean, that that's that's important.
QuestionerSo what's your role that the Bill and Melinda Gates Foundation writing checks?
WarrenActually, it's an overstock certificate.I just endorse it. But it's the same role I have with my children sincebut it's more than that.I mean, you have a sense of of wanting to inspire.Well, and they but I wouldn't have joined with them if they didn't have the same goalsthere. Their philanthropy is grounded around the proposition that every life has equalvalue. My my children believe the same thing.And and and they're young and they're willing to devote the rest of their lives to itjust as my children are doing.So I I've got these people working for me that do it far better than I would do it.And I happen to love what I do.And fortunately, that tends to increase the amount of resources available forphilanthropy. Still tiptoeing to work.
QuestionerAre you? Oh, I'm doing handspring.
QuestionerSo the Rockefeller Foundation was famous for the Green Revolution and its support ofthat. Are you think that something like that in agriculture?
WarrenI think today where I call it the Brown Revolution, we've we've got to start protectingour natural resources and soil is the key.I mean, you can't you know, it's like if you want to go somewhere in a car, you've got toput gasoline in it or diesel fuel.You've got to you have to have soil to grow anything.And we've not done a good job of recognizing it's not sexy.Soil isn't sexy. So, you know, people don't think about it, but we've we've got to thinkit's. Well, I I gave Bill this book called Dirt.I told him I said I said, read this and you'll understand why soil is more important.And but, you know, I do.Yeah. And, you know, it's it's it's a challenge because it's not what everybody thinks about.But but we we do have to pay more attention to how we're treating our natural resources.And we want to be able to farm the way we farm in a hundred years.And then we've got to do it.
QuestionerI want to one more time, because she was such a part of of the shaping of three of you.I mean, you said to me about Susie, you know, that that you once said to me, you've got tomeet her because I was a mess before I met.That is true. This conversation took place not not not soon, not later, soon, soon afterthis she passed away.But here is her reflecting on the family and the values.I think that's what made born a Democrat.
WarrenI take the credit for that because both our parents were Republicans and we are not.And he would go with me to hear speakers, you know, Jesse Jackson and the man who wroteBlack Like Me and Lewis.And he would go with me.Oh, Al Loewenstein, we loved him, loved him.So without knowing it step by step, I was infiltrating.And so and he's very much I find this a profound thing.I was talking to him one day about some racial issue and he looked at me and this Charliewould have been 40 years ago.And he said to me, wait till women discover they're the slaves of the world.Now, how many men are cognizant of that?And even women, men.
QuestionerWow.Prophetic, huh?
WarrenCharlie, I went back and watched that interview before I wrote this book.
CharlieYeah, I just threw out the book.
QuestionerYeah, I should point out she she's just recovering from throat cancer.You know, I affected her voice.And this was June 2004.Let me talk about the world that you see now politically.We just went through a crisis in Washington.Washington created crisis.By demanding 30 things before they would support not only a rise in the debt ceiling, but alsosome other budgetary items.What is this doing, you think, to the image around the world and people who either holdtreasuries or B have looked to America for economic strength?
WarrenYeah, well, I've told my children and I think it's in the book that, you know, it's been20 years building a reputation.You can destroy it in 20 minutes.Well, the United States has spent 237 years building a reputation, and that's why we'vebecome the world's reserve currency.And and people trust our full faith and credit.And for a Congress to threaten to destroy what took 237 years to build is just it'stotally irresponsible.The debt ceiling, it shouldn't exist.I mean, the way to have a ceiling on your debt is to not spend more.So in other words, the idea of a debt ceiling and negotiating over it is nuts.But once you have it, if you're going to have it, it can't be used.I mean, we have nuclear weapons, but we're not going to use them.Even if we get disappointed with other people, we don't say because this isn't happeningthe way we want it, we're going to use a nuclear weapon.The debt ceiling is a political weapon of mass destruction.And both parties should say it is off the table.You know, we can argue about abortion.We can argue about immigration.We can argue about food stamps, whatever it may be.But we're not going to tie that to a threat to destroy a reputation that the United States
WarrenSo I would ask both political parties to say it is off the table.Do you think it's more likely that they will be listening because of the close call wehad here? I think maybe, you know, I'm I always have hope in humans.And actually, Senator McConnell, who I don't agree with on many things, but he is he isintroduced in the past, I believe, something that at least modeled it, it willreduce the chance that the debt ceiling will be used as a weapon and it should beeliminated entirely. But if that's the best we can do politically, you know, more powerto him. I thought it would have been a weapon of mass destruction.It would just been plain stupid.It would you know, it would be a bit like using poison gas or something.I mean, just because you weren't getting your own way.It is not something to be used as a weapon.
QuestionerOK, so now you have Democrats and Republicans and you have a commission.Patty Mary and Paul Ryan are sort of chairing it.Yeah. And they've got I think they're good people and they're good people and they'vegot until and they know something about budgeting because they have chairman of therespective committees. You now have until December 13th.Should they use Simpson Bowles as a starting point?
WarrenWell, I think they can use that or something like it.I mean, I mean, their goal ought to be to get a lot done.And so what should they try to get done?Help me understand. Help them understand what a Buffett recommendation.Well, they're not going to get five hundred and thirty five people on board, but theyshould do as much as they can toward both raising revenues where it won't hurt theeconomies. And and and I think looking at certain aspects of entitlement, if they wanta means test, my Social Security, I'm all for it.And there's a certain age, too.Yeah, probably you can't look at one part of a program without looking at the wholeprogram. But but if they come up with a program that I'm 80 percent in agreement with,I will cheer them on.I mean, nobody's going to be 100 percent in agreement.And that's their job.I mean, whether whether within this time frame they can get it or maybe maybe it'llhelp get done what's happened up till now.But the job of the Congress, you know, is not to be putting up debt ceilings, shuttingdown governments, doing things like that.The job of the government, they've got to find a budget now and do that so that theydon't have the debt ceiling crisis they had before.
WarrenThe first thing I would do if I were Patty Murray and Ryan, Paul Ryan, is I would Iwould say on behalf of our respective parties, you know, we are calling for absolutelytaking the debt ceiling out of any future discussions that tie up with anything else.
And I would say we've both sinned in the past.
I would not get into this finger pointing stuff or anything of the sort.
It doesn't make any difference who used it in the past.
It is an inappropriate instrument to use.
And you would say to Democrats, we have to reform entitlement.
We should. We should.
Because there's an article you saw in The Wall Street Journal a day or two ago saying,you know, the so Liberal and the Democratic Party saying no messing around withentitlement. Well, they're saying, you know, cut taxes as long as you have those twopositions certainly work wonderfully.
So far, that approach.
Now, I would say this to the extent it could be done.
If I were if I were Murray and Ryan, I would try to do this in private and come out withsomething of a package, because I think if you take a one by one, every party, nobodywants to give on the individual points.
So it's an enormous problem to have a debate in public when people are facing primariesand not that many months.
And that's what they're worried about.
So I would try to come out with something close to a package that everybody disliked alittle bit, but that overall we felt was good for the country.
So what is it you dislike that you'd be willing to see in the package?
Oh, I, I, I think that I think we have to make certain judgments about entitlements.
I think we have to make certain judgments about taxes, but how it's, you know, if youcan't really talk about one part of the package without looking at the whole package.
That's why I like to see him come out with the whole thing.
But let me just understand this, too.
I mean, when you talk about we need to we need to increase revenue, obviously we do.
You mean more than simply reducing deductions?
You mean increasing rates?
No, the revenue has to go up to 18 and a half percent or so of GDP.
Because that's where it weeps on that.
Yeah. Expenses.
That's the place that ought to be.
Expenses should be 20 and a half or 21.
We can take a two, two and a half percent gap without GDP going up, without the debtgoing up as a percentage of GDP.
There's nothing wrong with that.
I've operated in a world like that, you know, since I was since World War Two ended, it
Warrenworks. But it's not it's it's not impossible.We're richer than we've ever been.We're absolutely, you know, fifty thousand dollars of GDP per person.I mean, we are way richer than when I was working 30 or 40 or 50 years ago.So the problem isn't that the country has become poor.The problem is that we've over promised and we are unwilling in some cases to raise therevenues to meet some of the promises that we probably should have.Fifty thousand dollars means that when you compare our per individual, it's six timeswhat it was when I was born.And it's fifty thousand dollars or thereabouts.And in China, it's what, seven or eight thousand, maybe a little less, maybe four orfive. Yeah, we we we are the richest family on earth.Imagine when my dad was in the waiting room in 1930, you know, and somebody said to me,your son is going to live to when the average is six times per capita what it istoday. My dad would have thought it would be utopia.I mean, it's unbelievable what we've achieved in terms of learning how to turn outstuff. In terms of how do we handle the stuff we turn out, we're lagging a bit now.And to say that your son might have will have an income and a wealth larger than some anumber of countries to all things.Well, this country has a wonderful future, Charlie.And incidentally, five hundred and thirty five people can't screw it up.They may look like they're trying sometimes, but they can't.They can't stop. Three hundred and fifteen million Americans.I mean, America works, but it has certainly gotten gummed up in recent months.But do the Chinese and people own treasuries have somewhere else to go?No, no.And America will pay its bills.I mean, what the full faith of credit is still intact in the United States.I mean, I think I think enough people have learned something from going up to the brinkthat we're going to it should just be ruled out entirely.Why worry about something that isn't going to happen?Why cause millions of people to worry about something that the five hundred and thirtyfive know is would be crazy and won't happen.That doesn't make any sense. If I if if I would say something on the show that I knowisn't going to happen and then cause worry for tens of millions of people, that'sirresponsible. And the idea was that they're going to be able to defund Medicare, forexample, in the budget of Obamacare.Yeah, because they want a new post office, you know, and I'm I'm not going to vote for
Questionerthis. I mean, it's just it's crazy.But there's also this argument.And tell me how you see it, because we have deficit hogs who talk about long term debtthat this country faces.And you have Larry Summers and others who are arguing that, you know, what we need todo is focus on growth and that the growth we'll have will enable us to pay off thedebt because that is not an immediate need.And the immediate need is growth.Do you agree with Larry Summers?
WarrenWe're having growth and we're going to continue to have growth.We need growth to meet the challenge of being.But we should not increase our debt over time at a rate that's faster than our growth.I mean, we can handle the debt we have.We can handle the debt we have relative to our current output.But we can't keep getting have debt grow at a rate that's faster than output.Eventually that catches up with you.What is an appropriate rate of debt to GDP?Nobody knows exactly.But certainly what our net debt, people talk about close to 17 trillion, but our netdebt, you know, not four trillion off that.Our net debt is 70 odd percent of GDP.We came out of World War II with, I think, close to 120 percent.I may be off a little bit on that.So nobody knows a magic level, but you don't press it to the ultimate.I mean, you know, and if we stay at 72 percent or whatever it may be at the net ofnet debt to GDP, that's perfectly OK.You know, it got down into the 30s, not that many years ago, starting from that 120.But we're fine.But it's a trend that should not continue.
QuestionerHow do you feel about sequestration?
WarrenWell, again, that gets into the, you know, that sort of gets into the games thatpeople play. I would just like them to focus on what this country needs, what theycan do for the three hundred and fifteen million people.They're not all going to agree.You know, if they get a budget, you like 80 percent of it.I like 80 percent. It won't be exactly the same 80 percent, but we'll feel OK.I mean, we'll feel a lot better than having them play the games they've been playingthe last few months.
QuestionerBut do you have a sense?And I think you said yes, that they may very well because of what Mitch McConnell hassaid and that others have stepped forward to say we cannot let this happen again.We can't just kick the can down the road.It's it should be taken off.We use the atomic bomb twice in 1945.We've faced all kinds of things since then.The Soviets have faced faced all kinds of things that really irritated him that, you
QuestionerYou believe we learned the lessons that caused the crash in 2008?
WarrenWell, we learned that bubbles will happen. And when you get one in housing, it could be a very big bubble that we. People may get smarter in some respects when it comes to fear and greed. I don't think they'll change in the next few centuries anyway. I'll let you carry it out beyond that. But interestingly, we just had a Nobel Prize in economics awarded. And one man, Fahmy, you know, believes that the markets can be ordered and that they are efficient. They're efficient. The other Schiller says, no, they're irrational and we'll have more bubbles.
QuestionerYeah. Where do you come down?
WarrenWell, the markets are generally quite efficient, but they are not efficient. And I think probably Professor Palmer would say that. Yeah. Schiller is right that we will have more bubbles. This was a particularly extreme one because it involved the biggest asset class in the country that almost everybody had housing. And it and it also was leveraged to the hilt in many cases. People had refinanced their houses and everything. So you had a huge asset class. Margin to the hill. And when that asset class fell in price, I mean, it hit tens of millions of people and financial institutions all over the world that lent based on. I mean, it was it was designed to be a huge, huge crash. And we got it.
QuestionerAnd do you think we've learned the lesson?
WarrenWe've learned a lesson about that kind of bubble. I mean, you know, will Dodd-Frank help us next time? I'm not sure.
QuestionerYou don't think they've done the job that was necessary with Dodd-Frank in terms of creating a regulatory structure that may be both a warning and preventing people from doing the kind of behavior that got them into trouble in the first place?
WarrenFear and greed are pretty hard to control. You know, fear and greed triumphs over regulation. After 1929, you know, we spent two or three years. We had the FCC. We had deposit insurance. We did all these things looking at 1929. And, you know, we got 19 we got 2008 when I don't I don't think humans will ever behave in a way where you don't get mass fear from time to time. One interesting thing is that Tim Geithner is now having some speeches in private conversations who said we could not have done what we did.
OtherBernanke, Paulson and me without the emergency powers that we were given to use bythe Congress. And then some people in the present debate want to stop that kind ofpower. If you look at Dodd-Frank, I haven't read all 20, however many pages there are.But. Bernanke used something called Section 13-3.I had a Federal Reserve chairman, I won't tell you which one, who told me once hesaid under 13-3, we can do anything.And the truth is, we had to do almost anything that.And Hank Paulson had something called the Emergency Stabilization Fund.It was set up when they changed the price of gold back in 1940.That's the thing he used to guarantee money market funds.Nobody ever thought it was designed for that, but they did it, you know.And who was going to stop him?I don't know what the Emergency Stabilization Fund allows, but that you had men therewho would act and who had these authorities.And to some extent, I believe I may I may be wrong on this.I made that Dodd-Frank circumscribed some of those abilities that the Fed and theTreasury had. And believe me, they were important last time.And they clearly say so.
QuestionerYeah. There's also this, J.P.Morgan and a $13 billion settlement.What are what do you think of that?I mean, was that appropriate?Was it the right amount?Will it serve to send a signal?
OtherI don't know what the right amount is, but I know this.When a prosecutor tells you that a financial institution, it was I think we got fined$290 million when I was at Solomon.I had no negotiating power.Believe me, if they brought a criminal action against us, we were out of business thenext day. And that would have led to a lot of consequences.So you have you really have no you're like a wolf burying your throat.I mean, basically, if you're dealing in that kind of a situation.And I don't know where the numbers come from.I do know that that in my own view, punishing J.P.Morgan for anything that happened in connection with Bear Stearns or WAMU, I thinkis a terrible mistake.I mean, maybe Jamie didn't get an indemnification agreement on Bear Stearns.But he was he was stepping forward at a time that the government wanted him to stepforward. And same way with WAMU.Do you think it was unfair? Yeah, I think if it relates to any of that, I think it'sunfair. Yeah, I really do.I think they will argue that it was more than that.But I mean, well, there was more than that, probably.But they have referenced I think they've referenced the sins of of Bear Stearns and
WarrenAnd I, you know, I don't think anybody in government was hoping that J.P.Morgan was going to walk away from Bear Stearns or WAMU.But I think they could have they probably could have gotten an indemnificationagreement if they if they'd wanted to, you know, take risks with the whole economy interms of keeping the negotiations going.But, you know, they were asked to act in a very, very quick manner.And they did. And maybe they're getting punished for it.Now, I think I think I'll put it this way.I think that the system is better off because Jamie Dimon has been running J.P.Morgan straight through from 2008.
QuestionerCan you say that because?
WarrenI think I think the guy has been a leader.Because the decisions he's made in building the biggest bank in America.
QuestionerYeah. And when Bear Stearns was going down, he was there.And when WAMU was going down, he was there.And and those were important decisions, not just in terms of those institutions, butwhat they said to the rest of the world that somebody is stepping up.
WarrenWho pays for this?Thirteen million dollars.The shareholders pay for it, and of course, they aren't even the shareholders around inthe past. That's the nature of it.And if J.P. Morgan is today, two other banks, you have an investment in Bank ofAmerican Wells Fargo might also be at risk.
QuestionerWell, they've written big checks already.And the truth is, if your regulator comes around to you and you hold licenses in allthese states and maybe with your security, you do what they say.
WarrenYou know, you put up the best argument, but you do what they say.
QuestionerWell, according to what we have read, they, Jamie, very much wanted them to also foregotheir any criminal possibilities.And they refused to do that.So the criminal possibility still is out there.
WarrenStill is out there. I don't I don't think it'll happen.
QuestionerNo, I don't know. But if you didn't think it was going to happen, I would not.I would not like running a financial institution with the threat of a criminal actionagainst it. I did it one time.
WarrenI saw my brothers and I did it.And every day you wake up wondering whether the plug will be pulled.
QuestionerWhen you look at what they did and in terms of the future, J.P.Morgan can absorb this.They can absorb 13 billion.That's why they got asked for it.
WarrenYeah. If the exact same actions that happened at a place that couldn't afford a 13 billion, you wouldn't. They wouldn't do that.
QuestionerNo, no. Do you think two billion too big to fail is still with us and should be with
Questionerus? I think. Yeah, I think it's but.Too big to be punished.Should the people that that were active participants have walked away rich.
WarrenYou know, it's the shareholders of those institutions that pay.
I mean, the shareholders of AIG pay.
They didn't have anything to do with the actions of AIG financial products thatpeople that said they lost a very significant percentage of their net worth on thestock. I think that if you run a major financial institution and you need the helpof the government, you and your and your spouse should go away broke.
I mean, that's all kinds of other people end up getting broken.
That's not what happened. No, that's not what happened.
QuestionerHow would you correct that?
WarrenWell, let me write it.
I could write a statute if you gave me a little time.
Let's say, well, it would it would it would say that it had to be more and more and moredrafted by somebody who knows more about that than I do.
But essentially, I would not let any huge financial institution who's so important to thefunctioning of the United States that they had to go to the government and get saved.
I would I would make sure that the CEO that led to that and the spouse walked away broke.
And I would say that the director should at least have to refund everything they've earned inthe previous five years or so.
If that were there, I think you'd have more attention going into, you know, you can say thedownside to some guy that's got 500 million and maybe 100 million of his stock.
But that isn't you know, that that's not real.
It's the shareholders that pay for it.
And it's and it's society that pays for it.
So if you want to change human behavior, I think you change the penalty that happens to thehumans whose behavior counts in that situation.
QuestionerYeah, but I mean, you're talking about financial loss to these people and they should go brokeand they shouldn't profit from the decisions they made that ruin the lives and fortunes of a lotof other people. Yeah, that's what you're saying.
WarrenYeah. Yeah.
QuestionerShould they go to prison?
WarrenThat depends on what they did, but I don't rule out things that justified going to prison.
QuestionerYou know more about this than most people.
WarrenYeah, that's hard to say.
I don't know the answer to that, but but it's not inconceivable to me, but I don't know theanswer to that. The Buffett rule is there.
QuestionerYeah, well, my my my my assistant is called Debbie Bussani, so it's the Bussani rule aroundthe office. And I know and love her.
QuestionerYeah, you should. But and there's also this, though, I mean, what is interesting and this hascome up in this conversation and it's about a life or it's about a financial doings.You don't want to go right where the line is.You want to play in the middle of the field.Sure. And you don't want to do things that if they ended up on the front page of The New YorkTimes, your life would be ruined.As you say, you can build a reputation for 20 years and you can destroy it in one moment.
WarrenYeah. And the United States almost did that here recently.
QuestionerBut you're optimistic about the country because of the innovation, because of the resources,mainly because of the human capital.
WarrenJust look at the last 237 years. I mean, when is it paid to bet against America over any time? 237 years. You know, people say, well, you're betting on America. Well, who wants to bet against? I mean, just look at the record and we haven't come close to tapping our human potential. Now, this country's best days lie ahead of us. Tapping our human potential because science is moving forward so fast and every other kind of everything, everything, everything.
QuestionerNow, here's the other interesting thing about your dad, who, as you know, I've had many,many conversations with IBM.You made an investment in IBM, notwithstanding the fact that you'd always said, I don'twant to invest in things that that have to do with technology that I might not understand.They've seemed to have run into a rough patch, too.
WarrenWell, I'm sure Ginni Rometty is disappointed with some aspects of this year, but they'regoing to earn more. They're going to earn more money this year than they've ever earned. And they will order some China, I suspect.
QuestionerSome of it, yeah.
WarrenBut they will have a record per share earnings this year. You know, I mean, that can be disappointing if you expected more. But it is not a bad record, believe me. And I mean, this is a good place to talk in this conversation about that, which is that, you know, you didn't invest in IBM because what you thought they might do and the stockprice might do in the next quarter or the next quarter, the next quarter, you had tolook at the fundamentals of the business and say they're on the right track. I don't know what IBM earned in the third quarter of 1927 or 1962. I mean, in the end, every company, including Berkshire, you know, we've had we've had afair number of blips over time. But if we do the right things, we'll get the right result over time. And we are fortunate to be operating in the best country in the world. We got a tailwind. And so does your son.
QuestionerForty chances. And your grandson with the forward by you with references to your wife and your motherand your grandmother finding hope in a hungry world.
OtherGreat to meet you. Thank you.
QuestionerGreat to have you back. Nice to be back.
OtherThank you. Thanks, Charlie. Back in a moment. Stay with us.