QuestionerThis question comes from James Lewis, from Logan, Ohio, who said it was okay to use his name in City. He says, one of the substantial investments of Berkshire is Wells Fargo. The chairman of Wells Fargo supposedly indicated that he did not want to take TARP funds from the federal government. He furthermore recently said that some of the programs of the federal government to reinvigorate the banks were asinine. Mr. Munger, do you agree with the chairman of Wells Fargo and please explain why you, do or do not agree. And Mr. Buffett, do you agree with Mr. Munger?
CharlieYes. When a government is reacting to the biggest financial crisis in 70 years, which threatens important values in the whole world, and decisions are being made hurriedly and under pressure and with good faith, I think it's unreasonable to expect perfect perfect. agreement with all of one's own ideas. I think the government is entitled to be judged more leniently when it's doing the best it can under trouble. Of course, there's going to be some reactions that are foolish, and I happen to share one of the troubles of some of the Wells Fargo executive in that I'm pretty blunt. I happen to think that the accounting principle that says you're earning go up as your credit is destroyed because if you had any money left, you could buy your own debt back at a discount. I happen to think that's insane accounting. And I think the people who voted it into effect ought to be removed from the accounting board. So a man who talks like that has to have some sympathy with the people at Wells Fargo. He usually gets to hang him by their thumbs, but he held back this morning.
WarrenThe government in September, mid-September last year, really did, they were facing a situation that was as close to a total meltdown throughout the financial system as I think you can imagine. You had a couple hundred billion dollars move out of money market funds in a couple of days. You had the commercial paper market freeze up, which meant that companies all over the country that had nothing to do with the financial world, basically. We're going to have trouble meeting payrolls. We were, we really were looking into the abyss at that time, and a lot of action was taken very promptly. And overall, I commend the actions that were taken. So as Charlie says, to expect perfection out of people that are working 20-hour days and are getting hit from all sides by new information, bad information, that one weekend with Lehman going, AIG going, Merrill would have gone. And in my view, unless the B of A had bought it. I mean, it was, when you're getting punched from all sides and you have to make policy and you have to think about congressional reaction and the American people's reaction, you know, you're not going to do everything perfectly. But I think overall, they did a very, very good job.