David Sokol, a key Warren Buffett lieutenant, told CNBC Friday that it would be a “disaster” if Congress enacted retroactive legislation that voided contracts dealing with derivatives.
“If pre-existing derivatives don’t exist any more, both sides [would have to] argue whether they still have a contract,” said Sokol, CEO of two of Berkshire Hathaway holdings, MidAmerican Energy and NetJets.
The derivatives issue is "such a huge part of the financial system today, and it needs to be dealt with properly.”
For Berkshire, Sokol said, the derivatives issue is small, but it is major for U.S. industry.
“Our concern is about the financial integrity of our economy," he said.
“The worst case for Berkshire would be somewhere between $6 [million] to $10 million in collateral," added Sokol. "We have it: It’s a nonissue.”
Another issue is protecting the “sanctity of the contract,” he said.
Sokol noted Berkshire chair Warren Buffett’s often-quoted phase that, when used improperly, derivatives are financial weapons of mass destruction.