Warren Buffett tells CNBC he's making his surprise $5 billion investment in Goldman Sachs because "the price was right, the terms were right, and the people were right."
In a live telephone interview with our Becky Quick on Squawk Box, Buffett said he likes to "bet on brains" and called Goldman the best firm on Wall Street.
But he also made it very clear that he would not have bought anything right now if he wasn't confident Congress will do the "right thing" and approve the financial bailout proposal put forward by Treasury Secretary Henry Paulson.
He compared the urgency of passing a bailout with American's decision to go to war after Pearl Harbor was attacked in 1941.
Buffett told us the financial system was on the brink of collapse last week before Paulson and Bernanke went to Congress with their plan. And he warns that last week will "look like Nirvana" if a bailout plan isn't passed by Congress.
He calls the current crisis everyone's problem, not just Wall Street's, with the markets in a "very, very difficult situation."
While "no one likes to write" a $700 billion check, Buffett thinks the government could make a profit when it eventually sells the now-toxic debt it would be acquiring in a bailout. "They could make money on this," he predicts, if it's handled properly.
Why buy a Wall Street firm after his difficult experience with Salomon in the early 1990s? "The pain has worn off," he joked. Plus he thinks Goldman is extremely well run. Berkshire and Goldman have a long-standing relationship.
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He also told us his partner Charlie Munger has given his endorsement for the Goldman investment. Buffett said the Goldman deal came together very quickly.
Buffett also said Berkshire has been, and will probably remain, interested in picking up some of AIG's assets.
Buffett said Paulson is doing a great job, and he recommended that the next president keep him as Treasury Secretary for another year or so.
The first part of the complete transcript has been posted here on Warren Buffett Watch.
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