1. Buffett recalled this, and said, “I think somebody even may have bought a car just because they ran out of rental cars.”
2. Interview with Bob Nardelli.
3. Interview with Tony Pesavento.
4. Buffett told the author this in 2001, shortly after the terrorist attack.
5. The term “unforeseeable” as an explanation for large losses was virtually universal after 9/11 in the insurance industry.
6. Interview with Susie Buffett Jr.
7. This initial estimate was revised to $2.4 billion in the December 31 annual report.
8. Charles R. Morris, The Trillion Dollar Meltdown. New York: Public Affairs, 2008.
9. Leading to reforms such as not allowing analysts to be compensated based on investment-banking work, and setting up “firewalls” between analysts and investment bankers.
10. For $835 million.
11. For just under $1 billion. Kern moved 850 million cubic feet of gas a day from the Rocky Mountains to Las Vegas and California.
12. This pipeline moved 4.3 billion cubic feet of gas per day. Berkshire bought it for $928 million, after Dynegy had gotten it for $1.5 billion when Enron went bankrupt and NNG was being held as collateral (both had assumed $950 million of NNG’s debt). After MidAmerican’s two pipeline deals in 2002, it transported 8% of the gas in the U.S.
13. Berkshire joined with Lehman and Citigroup to lend $2 billion to Williams at a 20% interest rate.
14. Pre-9/11, Munich Re and AXA struck a derivatives deal valued at $50 million with Berkshire Hathaway Group to reinsure against an earthquake canceling 2002’s FIFA World Cup in South Korea and Japan. BRK would pay regardless of the actual cost of the loss, if the tournament was postponed or canceled because of an earthquake of a certain magnitude. Separately, after 9/11, AXA pulled out of insuring the tournament, and on October 30 National Indemnity stepped in to insure it, allowing the World Cup to proceed.
15. Berkshire Hathaway letter to shareholders, 2007.
16. Interview with Frank Rooney.
17. Source: IRS, Statistics of Income Division, March 2007; Joint Committee on Taxation, Description and Analysis of Present Law and Proposals Relating to Federal Estate and Gift Taxation, Public Hearing Before the Subcommittee on Taxation and IRS Oversight of the Senate Committee on Finance, March 15, 2001.
18. In 2007, over 8% of the federal budget, or $244 billion, was interest on federal debt. That is almost exactly ten times the amount collected through the estate tax.
19. See, for example, Melik Kaylan, “In Warren Buffett’s America …” Wall Street Journal, March 6, 2001; John Conlin, “Only Individual Freedom Can Transform the World,” Wall Street Journal, July 26, 2001; Steve Hornig, “The Super-Wealthy Typically Do Not Pay Estate Taxes,” Financial Times, June 15, 2006; Holman W. Jenkins Jr., “Let’s Have More Heirs and Heiresses,” Wall Street Journal, February 21, 2001.
20. William S. Broeksmit, “Begging to Differ with the Billionaire,” Washington Post, May 24, 2003.
21. Daft had options to buy 650,000 shares, initially estimated as worth $38.1 million to $112.3 million in 2015, depending on how much the stock appreciated. He also got $87.3 million in restricted stock awards, totaling 1.5 million shares. Henry Unger, “If Coca-Cola Chief Daft Fizzles, He’ll Lose Millions,” Atlanta Journal-Constitution, March 3, 2001.
22. The CEO–worker pay gap of 411-to-1 in 2001 was nearly ten times as high as the 1982 ratio of 42-to-1. “If the average annual pay for production workers had grown at the same rate since 1990 as it has for CEOs, their 2001 average annual earnings would have been $101,156 instead of $25,467. If the minimum wage, which stood at $3.80 an hour in 1990, had grown at the same rate as CEO pay, it would have been $21.41 an hour in 2001, rather than the current $5.15 an hour.” Scott Klinger, Chris Hartman, Sarah Anderson, and John Cavanagh, “Executive Excess 2002, CEOs Cook the Books, Skewer the Rest of Us, Ninth Annual CEO Compensation Survey.” Institute for Policy Studies, United for a Fair Economy, August 26, 2002.
23. Geoffrey Colvin, “The Great CEO Pay Heist,” Fortune, June 25, 2001. A 2001 option grant later became the subject of controversy in the 2007 stock-option backdating scandal.
24. Warren Buffett, “Stock Options and Common Sense,” Washington Post, April 9, 2002.
25. Two other companies, Winn-Dixie and Boeing, had earlier started treating stock options as an expense. But they had nothing like Coca-Cola’s clout.
26. Warren Buffett, Securities and Exchange Commission’s Roundtable on Financial Disclosure and Auditor Oversight, New York, March 4, 2002.
27. Berkshire Hathaway letter to shareholders, 2002.
28. David Perry, “Buffett Rests Easy With Latest Investment,” Furniture Today, May 6, 2002.
29. He didn’t really want her to come back either, although he looked tempted a few times.