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More from Omaha: Andrew Ross Sorkin asks if Dodd-Frank banking rules will affect the...

More from Omaha: Andrew Ross Sorkin asks if Dodd-Frank banking rules will affect the profitability of Berkshire Hathaway's (BRK.B) investments. Buffett says investments in US Bancorp (USB), M&T Bank (MTB), and similar holdings are not likely to be disproportionately affected, although returns on tangible equity at some holdings will be lower going forward. Buffett also opines on speculation, saying subsequent bubbles will not likely be the fault of the financial sector. Munger: "I do not see why massive derivative books should be mixed up with insured deposits ... [I don't like] bankers acting like investment bankers." (NY Times, WSJ)
Comments (9)
  • harrykutcher
    , contributor
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    thanks,sandy weill
    4 May 2013, 01:40 PM Reply Like
  • runyontr
    , contributor
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    Can someone fill me in on his views on what a banker should be investing in and what an insurance banker should be investing in?
    4 May 2013, 02:33 PM Reply Like
  • Philip Marlowe
    , contributor
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    A banker should be investing in loans they originate. I have not idea what an insurance banker is.
    4 May 2013, 04:14 PM Reply Like
  • runyontr
    , contributor
    Comments (30) | Send Message
     
    Philip,
    Thanks for pointing that out. I misread "investment" as "insurance".

     

    I think I understand the difference:

     

    Banker: Makes money on the difference between the interest rates on the money people put in the bank and the rate they get on their loan. I.e. valued based on their earning power.

     

    Investment Banker: Makes money on finding buyers for a corporations issuing of debt, selling bonds above par, trading derivatives. i.e. valued based upon their assets.

     

    It explains why he like WFC (trading above book value).

     

    The quote is basically saying "Don't buy stocks/equity with people's deposits in banks".
    4 May 2013, 04:48 PM Reply Like
  • erryl
    , contributor
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    I think Buffett would say that bankers should be more like the ones he invests in.
    4 May 2013, 03:17 PM Reply Like
  • King Rat
    , contributor
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    Buffett has quite the unMidas touch of purchasing financial institutions that subsequently have a major scandal.
    Dodd Frank will not affect Buffett's bottom line because while it hurts everybody, it comparatively hurts the small and midsized firms the most. The extra squeeze on the small guys is a boost to Buffett.
    4 May 2013, 03:48 PM Reply Like
  • 2012blue
    , contributor
    Comment (1) | Send Message
     
    I never approved of BofA and Merrill Lynch being lumped together. Most of the BofA brokers (or bank brokers as a whole) do not know what they are talking about.
    5 May 2013, 09:21 PM Reply Like
  • Calvinbecerra
    , contributor
    Comments (6) | Send Message
     
    Brk.B all the way. Picked up another 100 shares even at 111.50
    5 May 2013, 09:21 PM Reply Like
  • Michael Bryant
    , contributor
    Comments (5182) | Send Message
     
    (MBT) is a great bank. Wrote a stocktalk long ago. I bet (MBT) will outperform (BRK.B).
    6 May 2013, 04:03 PM Reply Like
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