1. Michael Santoli, “They’ve Got Class,” Barron’s, September 10, 2007.
2. On October 9, 2007.
3. This excludes approximately $180 million of imputed investment income on the $5.5 billion of General Re’s cash that Buffett had transferred to National Indemnity and Columbia Insurance through intercompany reinsurance agreements. General Re estimated the effect on its return on equity at 150 basis points in each of 2005, 2006, and 2007.
4. The combination of underwriting profits and higher float produced a 20% return on average equity in 2006, compared to losses in earlier years. General Re grew its book value at an average of 12.8% since 2001, bringing its capital to more than $11 billion, compared to $8.6 billion when it was acquired. It made a $526 million profit from underwriting on premiums of about $6 billion—compared to earlier losses of between $1 and $3 billion (depending on the year) on premiums of just under $9 billion. Float had risen from about $15 billion to $23 billion on a 32% decline in premiums.
5. Berkshire Hathaway 2007 letter to shareholders.
6. The Department of Justice was using broad powers under the so-called Thompson Memorandum, which defined what was meant by “cooperation” by a corporation in a criminal investigation, and among other things required companies to compel their employees to waive their Fifth Amendment rights and to deny employees assistance with legal fees, under threat of corporate criminal indictment. The most significant elements of the Thompson Memorandum have since been gutted as unconstitutional.
7. HIH Royal Commission, The Failure of HIH Insurance. Australia: National Capital Printing, Canberra Publishing and Printing, 2003.
8. Doug Simpson, “Search for Deep Pockets Widens in Reciprocal of America Case,” Unintended Consequences blog (dougsimpson.com/blog), March 3, 2005; Timothy L. O’Brien, “Investigation of Insurance Puts Buffett in Spotlight,” New York Times, March 28, 2005; Timothy L. O’Brien and Joseph B. Treaster, “The Insurance Scandal Shakes Main Street,” New York Times, April 17, 2005; Marisa Taylor, “U.S. Dropped Enron-Like Fraud Probe,” McClatchy Newspapers, July 23, 2007; Scott Horton, “Corporate Corruption and the Bush Justice Department,” Harper’s Magazine, July 24, 2007.
9. If so, it was unnecessary. The Buffalo News undoubtedly would have endorsed Spitzer anyway.
10. In 1986, as the bubble developed, Buffett bought bonds as the “least objectionable alternative” (1986 shareholders letter). He kept the Washington Post, GEICO, and Cap Cities, which he said would be “permanent” investments. By 1987, therefore, he had made a mental shift toward passive investing in certain public companies.
11. On December 12, 2007, major central banks began to provide funding at terms longer than overnight, and began to auction funding against a broader range of collateral and with a broader set of counterparties. The Federal Reserve activated swap lines to help the other central banks provide liquidity in dollars to their markets.
12. Collateral posted as of March 31, 2009 totaled approximately $1 billion.
13. Buffett especially used his will for this purpose, talking about it in vague terms without making promises, and changing it periodically.
14. The title of a recent book, Even Buffett Isn’t Perfect: What You Can and Can’t Learn from the World’s Greatest Investor by Vahan Jinkiqian (New York: Portfolio Hardcover, 2008), says it all about the standard to which Buffett is held.
15. As Berkshire’s first-quarter 2009 form 10-Q filed with the SEC stated, “There is minimal involvement by Berkshire’s corporate headquarters in the day-to-day business activities of the operating businesses.”