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Buffett: Banks Are to Blame For Subprime Debt Crisis

Blame for the sub-prime crisis lies at the feet of banks who took too many risks in mortgage lending, U.S. billionaire investor Warren Buffett told newspaper El Pais in an interview published on Sunday.

Warren Buffett
CNBC.com
Warren Buffett

"The banks exposed themselves too much, they took on too much risk .... It's their fault. There's no need to blame anyone else," he said.

Buffett, dubbed the world's richest person by Forbes magazine, said he believed the situation in financial markets would not deteriorate further.

"I don't think the situation will get worse in financial markets. General conditions in the business world will get worse, but it will only last a while," he said, adding he had no idea when an upturn would come.

Buffett gave the interview on a recent visit to Madrid, as part of a European tour including Switzerland, Germany, Italy and Spain on the look out for new investments.

He said the idea of the trip was to increase awareness amongst European businesses of his holding company Berkshire Hathaway, which holds stakes in businesses ranging from American Express to Coca-Cola .

He said he wanted business owners to think of him when they were looking to sell.

"We want to buy big companies that earn at least 50 million euros ($78.6 million) before taxes, and there's more of those in Europe than in other parts of the world," he said.

He would not be drawn on what companies in particular he was looking at, other than saying he was not interested in distressed businesses.

The day before, Buffett was quoted in the German magazine Der Spiegel as saying the US is already in a recession and that it will be longer as well as deeper than many people expect.

He said the United States was "already in recession" and added: "Perhaps not in the sense that economists would define it" with two consecutive quarters of negative growth.

"But the people are already feeling the effects," said Buffett, the world's richest man. "It will be deeper and last longer than many think."

But he said that won't stop him from investing in selected companies and said he remained interested in well-managed German family-owned companies.

"If the world were falling apart I'd still invest in companies," he said.

Buffett also renewed his criticism of derivatives trading.

"It's not right that hundreds of thousands of jobs are being eliminated, that entire industrial sectors in the real economy are being wiped out by financial bets even though the sectors are actually in good health."

Buffett complained about the lack of effective controls.

"That's the problem," he said. "You can't steer it, you can't regulate it anymore. You can't get the genie back in the bottle."

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