Banks will repay bailout cash, Buffett, Paulson say
2/10/2010OMAHA - Henry Paulson, the former U.S. Treasury chief, and billionaire Warren Buffett said taxpayers will recover every cent paid out to banks during the economic meltdown and may even turn a profit.
The staunch Democrat investor and the Treasury secretary under President George W. Bush spoke yesterday before 2,400 at the Greater Omaha Chamber of Commerce's annual meeting.
Mr. Paulson, in his recently released book, defended the government, which scrambled to prevent failing U.S. banks from dragging down the global economy with them.
"As bad as this is, when we look back it's not as bad as it could have been," he said.
And he said the United States is better off today than most countries.
"Every other major economy has many more significant challenges than we do," Mr. Paulson said. But he said several significant challenges remain.
He said he thinks compensation is normally out of whack on Wall Street, but now in the aftermath of all the government bailouts, many executive pay packages are excessive.
His 500-page book, On the Brink: Inside the Race to Stop the Collapse of the Global Financial System, offers a chronological account of the rush to prevent an economic disaster as Lehman Brothers and American International Group spun toward collapse in September, 2008. Mr. Paulson was Treasury secretary from June, 2006, to January, 2009.
Mr. Buffett led the talk by asking Mr. Paulson about the book but made few comments himself. Mr. Buffett said the book gave him an appreciation of how well former President George W. Bush understood the economy and events during the crisis.
Mr. Buffett praised the actions of Mr. Paulson, Federal Reserve Chairman Ben Bernanke, and Mr. Paulson's successor, Treasury Secretary Timothy Geithner.
Mr. Paulson also thanked Mr. Buffett, an icon to thousands of investors, who advised the former Treasury chief during the worst of the economic downturn.
Mr. Buffett is chairman and chief executive officer of Omaha's Berkshire Hathaway Inc., a holding company with a market value of roughly $173 billion.
He plowed $5 billion into one of Mr. Paulson's former firms, Goldman Sachs, as the company struggled.