1. This portrait of Susie in the late 1990s and early millennial era is based on comments from more than two dozen sources who knew her well but cannot be identified by name.
2. Interview with Howie Buffett.
3. Interest rates, which had been falling since 9/11, hit a low of 1% in June 2003 and remained there until June 2004.
4. This is a shorthand description for investors’ limited risk aversion during this period.
5. In “Mortgage Market Needs $1 Trillion, FBR Estimates,” Alistair Barr (MarketWatch, March 7, 2008) recaps a Friedman, Billings Ramsey research report that estimates that of the total $11 trillion U.S. mortgage market, only $587 billion was backed with equity—meaning that the average U.S. home had scarcely more than 5% equity. Before long, half of all CDOs would be backed by subprime mortgages (David Evans, “Subprime Infects $300 Billion of Money Market Funds,” Bloomberg, August 20, 2007).
6. In The Trillion Dollar Meltdown (New York: Public Affairs, 2008), Charles Morris explains that because the typical credit hedge fund was leveraged 5:1, the 5% equity was reduced to 1%—a 100:1 leverage ratio, or $1 of capital supporting $100 of debt.
7. He used derivatives himself, but as a borrower, not a lender. Therefore, if things went wrong, he did not have to collect from anyone else.
8. For example, he was called “The Alarmist of Omaha” by Rana Foroohar in Newsweek on May 12, 2003.
9. In his memoir, Jim Clayton says people find it hard to believe that he did not return Buffett’s call himself. He says it never occurred to him to do so, and he and Buffett have never called each other about business. During the months that the deal was in negotiation and litigation, the author observed that Buffett dealt only with Kevin Clayton.
10. Interview with Kevin Clayton.
11. Jim Clayton, Bill Retherford, First a Dream. (Tennessee: FSB Press, 2002.) The 2004 revised edition gives an account of Berkshire Hathaway’s fight for Clayton Homes.
12. Buffett had spent only $50 million in April to purchase PetroChina stock, but that brought Berkshire’s ownership to $488 million and over the limit that required disclosure to the Hong Kong Stock Exchange.
13. Buffett said he would buy foreign stocks under the right circumstances; e.g., in the United Kingdom or a newspaper in Hong Kong. However, he did not spend time seriously studying foreign stocks until opportunities in the U.S. began to thin.
14. Warren Buffett, “Why I’m Down on the Dollar,” Fortune, November 10, 2003.
15. From unpublished coverage of the 2003 Berkshire Hathaway annual meeting, courtesy of Outstanding Investor Digest.
16. A major advantage of the deal was Berkshire’s access to and low cost of funds. With its AAA credit rating, it could borrow at a far lower rate than any other manufactured-home maker and thus not only survive credit droughts but make money under conditions where Clayton’s competitors could not survive.
17. Speaking at the New York Public Library, June 25, 2006.
18. Andrew Ross Sorkin, “Buffett May Face a Competing Bid for Clayton Homes,” New York Times, July 11, 2003.
19. “Suit Over Sale of Clayton Homes to Buffett,” New York Times, June 10, 2003. Gray alleged that previous shareholder meetings electing directors had taken place without proper notice. In June the Delaware Chancery Court ruled that Clayton had technically not met the notice requirement, but since the meeting was so well attended by shareholders, the mistake was only technical and results of the meeting would not be overturned.
20. Jennifer Reingold, “The Ballad of Clayton Homes,” Fast Company, January 2004.
21. At its peak before the death of Susan T. Buffett, the foundation spent $15–$30 million per year in total, mostly on reproductive rights.
22. If Buffett had paid dividends and used them for the donations, the whole point would have been moot.
23. Douglas R. Scott Jr., president, Life Decisions International, letter to Warren Buffett, September 26, 2002.
24. Nicholas Varchaver, “Berkshire Gives Up On Giving: How a Pro-Life Housewife Took On Warren Buffett,” Fortune, August 11, 2003.
25. Compiled from various interviews.
26. As of 2008, pro-life activists, according to the U.S. National Abortion Federation, had committed 7 murders, attempted 17 other murders, made 388 death threats, kidnapped 4 people, committed 41 bombings, 174 instances of arson, and 128 burglaries, attempted 94 bombings or arsons, made 623 bomb threats, committed 1,306 instances of vandalism, made 656 bioterror threats, and committed 162 instances of assault and battery. These numbers exclude stalking, hoax device/suspect packages, hate mail, harassing phone calls, trespassing, invasion, Internet harassment, and other less serious incidents. The pro-life movement’s activities have resulted in 37,715 arrests as of 2007. Most mainstream pro-life organizations reject the terrorist wing of the movement, some vocally.
27. Under Delaware law, only shareholders in attendance were eligible to vote on a recess.
28. Jim Clayton, Bill Retherford, First a Dream.
29. Cerberus memorandum, “For Discussion Purposes,” reprinted in Jim Clayton, First a Dream.
30. By 2006, manufactured-home shipments had fallen to 117,510 units and were still declining at an average rate of 32% in 2007 despite a temporary bump in 2005 from Hurricane Katrina. (Source: Manufactured Housing Institute.)