Warren Buffett to CNBC: Rescue Bill Will Help, But Not "Panacea" for Economy
In a live telephone interview today (Friday) minutes after the House of Representatives passed the bailout bill, Warren Buffett told CNBC's Becky Quick that the measure will help unfreeze the credit markets, but warned that it is not a "panacea" for the economy.
While the rescue package will provide some tools to deal with the financial crisis and prevent what could have been a far worse situation, Buffett predicted that it will be quite a while before the nation's economic recession bottoms out.
He noted that the credit markets had been frozen and were getting worse by the day.
Buffett has made two big investments in recent days, anticipating that Congress would eventually "do the right thing" and pass a financial rescue plan.
On Wednesday, Buffett's Berkshire bought $3 billion of General Electric preferred stock, which pays a hefty 10 percent dividend.
Last week, Berkshire made a similar $5 billion investment in Goldman Sachs .
Buffett's Berkshire Hathaway holds a large stake in Wells Fargo, which today announced a deal to buy Wachovia Bank . (Citigroup may challenge that agreement because it had a deal to buy Wachovia's banking assets.)
He told Becky that the Wachovia deal was indirectly spurred by a recent change in the tax laws. Buffett also praised Wells, saying no bank has done a better job for shareholders and depositors during the financial crisis.
He also revealed that he owns only two domestic stocks in his own personal account, Berkshire and Wells. After the live interview, he laughingly told Becky that no one had ever gotten that particular nugget out of him before.
Back in August, Buffett told Becky that Berkshire had been adding to its holdings in either American Express or Wells Fargo. Today, he solved that little mystery. It was Wells Fargo.
Current Berkshire stock prices:
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