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CNBC TRANSCRIPT: CNBC'S BECKY QUICK INTERVIEWS BILLIONAIRE INVESTOR WARREN BUFFETT TODAY ON "STREET SIGNS"

CNBC TRANSCRIPT: CNBC'S BECKY QUICK INTERVIEWS BILLIONAIRE INVESTOR WARREN BUFFETT TODAY ON "STREET SIGNS"

WHEN: Today, Wednesday, October 1st at 2PM ET

WHERE: CNBC's "Street Signs"

Following are excerpts from the unofficial transcript of the CNBC interview with billionaire investor Warren Buffett on CNBC's "Street Signs."

All references must be sourced to CNBC.

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Warren Buffett
CNBC.com
Warren Buffett

QUICK: TEACHES US TO NOT WALK TOO FAR AWAY FROM OUR COMPUTERS. GENERAL ELECTRIC TALKING ABOUT THE PLANS TO OFFER AT LEAST $12 BILLION IN COMMON STOCK TO THE PUBLIC THE UNDERWRITERS ARE GOING TO HAVE THIS THIRTY DAY OPTION TO PURCHASE SHARES. ALSO, IT'S REACHED AN AGREEMENT TO SELL $3 BILLION IN PERPETUAL PREFERRED STOCK IN THIS PRIVATE OFFERING TO WARREN BUFFETT'S BERKSHIRE HATHAWAY. THE PERPETUAL PREFERRED STOCK HAS A DIVIDEND OF 10% ITS CULL ABLE AFTER 3 YEARS AT A 10% PREMIUM. THIS IS VERY SIMILAR TO THE DEAL WE SAW MR. BUFFETT GETTING INVOLVED WITH GOLDMAN SACHS LAST WEEK. THE ONLY DIFFERENCE I CAN SEE IS THAT HE TOOK THE PREFERRED STOCK WITH A DIVIDEND OF 10%. THAT COULD BE CULL ABLE AT ANYTIME FOR GOLDMAN SACHS, THIS ONE IS CULL ABLE ONLY UP TO THREE YEARS AT THAT 10% PREMIUM. THEY ALSO SAID THAT IN CONJUNCTION WITH THIS BERKSHIRE HATHAWAY IS ALSO GOING TO GET SOME WARRANTS, THEY'LL GET WARRANTS TO BUY $3 BILLION OF COMMON STOCK WITH A STRIKE PRICE OF 22.25. THAT'S A SIMILAR DEAL ONCE AGAIN AS THAT GOLDMAN SACHS DEAL WHERE HE WAS TAKING $5 BILLION IN PREFERRED STOCK AND 5 BILLION IN WARRANTS. ALSO MAKING COMMENTS SAYING THAT GE IS THE SYMBOL OF AMERICAN BUSINESS TO THE WORLD. HE SAYS, I'VE BEEN A FRIEND AND ADMIRER OF GE AND ITS LEADERS FOR DECADES. THEY HAVE STRONG GLOBAL BRANDS AND BUSINESS WITH WHICH I AM FAMILIAR. HE SAYS HE'S CONFIDENT GE WILL CONTINUE TO BE SUCCESSFUL IN THE YEARS TO COME. MR. BUFFETT'S ON A PLANE RIGHT NOW AND WE'VE BEEN TRYING TO LINK UP WITH HIM.

AS SOON AS WE DO, WE'LL BE ABLE TO ASK HIM A LOT OF THESE QUESTIONS. WHETHER HE IS COUNTING ON CONGRESS GETTING A PLAN THROUGH. WHETHER THAT IS PART OF WHAT HE IS DOING HERE. WE'LL TALK TO HIM HOPEFULLY IN A FEW MINUTES.

BURNETT: WE WANT TO BRING IN TO THE CONVERSATION, IF YOU HAVE TO GO, DO THAT. WE HAVE HIM NOW. YOU GOT HIM?

QUICK: MR. BUFFETT, THANK YOU FOR JOINING US.

BUFFETT: I'M UP HERE IN AN AIRPLANE AND I HOPE IT'S BEING POWERED BY GE

ENGINES.

QUICK: HOPE ITS BEING POWERED BY GE ENGINES. EVERY TIME WE TURN AROUND IT SEEMS LIKE YOU ARE DOING A NEW DEAL THESE DAYS. WHY INVESTING IN GE RIGHT NOW?

BUFFETT: I'VE FOLLOWED THE COMPANY FOR A LONG TIME, I KNOW THE MANAGEMENT, WE BUY LOTS OF WIND TURBINES FROM THEM. WE DO A LOT OF BUSINESS WITH THEM AND FRANKLY, THESE MARKETS ARE OFFERING THESE OPPORTUNITIES THAT WERE NOT AVAILABLE SIX MONTHS AGO. SO WE ARE PUTTING MONEY TO WORK

QUICK: ARE YOU SAYING THAT BECAUSE THE TERMS OF THIS DEAL VERY DIFFERENT FROM SOMEONE WHO WOULD BE BUYING COMMON STOCK.

BUFFETT: THIS DEAL IS PATTERNED VERY MUCH AFTER THE GOLDMAN SACHS DEAL.THE ONLY DIFFERENCE IS THAT THE PREFERRED IS NONCULLABLE FOR THREE YEARS. BUT THE PATTERN IS ALMOST IDENTICAL TO THE GOLDMAN SACHS DEAL.

QUICK: DID YOU GO TO GE OR DID THEY COME TO YOU?

BUFFETT: THROUGH GOLDMAN SACHS, THROUGH MY FRIEND BYRON, I WAS APPROACHED ON IT RECENTLY AND SO REALLY GOLDMAN SACHS APPROACHED ME.

QUICK: WHEN WE TALKED LAST WEEK ABOUT GOLDMAN SACHS, YOU SAID THE REASON YOU WERE DOING THAT DEAL IS BECAUSE YOU ASSUMED SOMETHING WOULD GET THROUGH CONGRESS. SOME SORT OF A RESCUE PLAN THAT PLAN AS YOU KNOW HAS RUN INTO A WALL THIS WEEK.

ARE YOU STILL EXPECTING THAT SOME SORT OF PLAN WILL GET THROUGH IN CONGRESS?

BUFFETT: YEAH, THE CONGRESS OF THE UNITED STATES WILL DO THE RIGHT THING WHEN THEY UNDERSTAND. THEY MAY GET SIDETRACKED AS THEY DID EARLY THIS WEEK, BUT THERE'S NO QUESTION ABOUT THE PATRIOTISM AND WILLINGNESS TO ACT IN THE INTEREST OF THE COUNTRY WHEN THEY UNDERSTAND THE ISSUES.THAT DOESN'T MEAN IT WON'T BE 435 TO NOTHING, BUT I'M BETTING THEY'LL ACT RESPONSIBLY ON THIS. I HAVE EVERY EXPECTATION THEY WILL, BUT I'LL FEEL BETTER AFTER THE VOTES HAVE BEEN COUNTED.

QUICK: THE DEAL THAT YOU HAVE DONE WITH GE TODAY AND GOLDMAN LAST WEEK, WHAT HAPPENS IF NOTHING DOES GET THROUGH CONGRESS, ARE THESE STILL GOOD DEALS?

BUFFETT: NO. I THINK WE HAVE TERRIBLE, TERRIBLE, TERRIBLE PROBLEMS. I SAID TWO WEEKS AGO THAT IT WAS AN ECONOMIC PEARL HARBOR. TWO WEEKS LATER, WE'RE IN WORSE SHAPE, BECAUSE YOU DON'T WANT A DELAY WHEN THERE IS REALLY A NATIONAL EMERGENCY. I THINK THAT'S PROBABLY OBVIOUS TO A MAJORITY OF THE MEMBERS OF CONGRESS NOW AND I THINK WE WILL GET ACTION. IF WE DON'T, I'LL HAVE DONE SOME DUMB THINGS.

QUICK: THE HOLDUPS OVER THE LAST COUPLE OF DAYS, HOW DAMAGING DO YOU THINK THAT IS THAT TO THE UNITED STATES ECONOMY?

BUFFET: IT HURTS. YOU'VE HAD AN ECONOMY THAT'S LIKE A GREAT ATHLETE THAT'S HAD A HEART ATTACK, CARDIAC ARREST, AND THE PARAMEDICS THAT HAVE COME, INSTEAD OF ARGUING WHO WAS AT FAULT, THE ATHLETES SHOULD HAVE BEEN CHECKING HIS BLOOD PRESSURE MORE CAREFULLY OR FOLLOWING A DIFFERENT DIET. THE THING TO DO IS TO APPLY THE RESUSCITATOR. AND THERE IS A RESUSCITATOR BILL IN CONGRESS AND I THINK IT WILL GET PASSED. IT DOESN'T HELP SPENDING TIME WORRYING ABOUT WHO IS TO BLAME FOR THE FACT THAT THE PATIENT HAD THE HEART ATTACK, OR WHAT HOSPITAL TO TAKE HIM TO. THE THING TO DO IS TO HAVE SOME ACTION.

QUICK: YOU KNOW, WE'VE HAD PEOPLE CALL IN, WRITTEN IT WHO KEEP BRINGING UP THIS QUESTION, IF THIS IS SUCH A GREAT DEAL FOR THE AMERICAN TAXPAYER, WHY ISN'T WARREN BUFFETT INVOLVED IN THAT DEAL AS WELL? WHAT DO YOU SAY TO THAT?

BUFFETT: I DON'T HAVE 700 BILLION. WE WOULD BUY AT MARKET PRICES, WE WOULD BUY THE MORTGAGE DEBT IF WE HAD THE BORROWING CAPACITY OF THE GOVERNMENT. IF WE COULD DO THE DEAL THAT IS AVAILABLE TO THE UNITED STATES GOVERNMENT AND HAVE ITS STAYING POWER, AND ITS BORROWING COSTS, WE WOULD MAKE SIGNIFICANT MONEY. I WOULD LOVE TO HAVE, IF THEY BUY THE ASSETS AT MARKET

PRICE, I WOULD LOVE TO HAVE 1% OF THE PROFIT OR LOSS THAT RESULTS FROM BUYING THESE ASSETS FROM TROUBLED FINANCIAL INSTITUTIONS.

THEY'RE COMPETITION IN BUYING THESE IS A BUNCH OF HEDGE FUNDS THAT ARE BUYING OF THE YIELD 15% OR 20% AND THE GOVERNMENT WITH ITS BORROWING COSTS, IF THEY BUY THEM AT MARKET, THEY WILL REALIZE A SIGNIFICANT PROFIT OVER TIME. I WOULD LOVE TO HAVE 1%, I CANT AFFORD ANYMORE THAT, BUT THE KEY IS BUYING AT MARKET PRICES.

QUICK: ARE YOU SAYING THAT IF YOU COULD GET 1% OF THIS DEAL, YOU WOULD PUT UP YOUR MONEY?

BUFFETT: YES. IF THE U.S. TREASURY OFFERED ME THE CHANCE TO HAVE A 1% PARTICIPATION IN PROFIT OR LOSS FROM THE 700 BILLION THAT THEY ARE GOING TO SPEND AND IF THEY BUY THE ASSETS AT MARKET PRICES, I'D FEEL I HAVE MADE MYSELF A VERY A SWEET DEAL.

QUICK: MEANING YOU WOULD PUT UP THE CASH IN FRONT AND YOU WOULD GO AHEAD AND TAKE THE RISK LOSS ASSUMING THAT IT WAS MARKET PRICES

BUFFETT: I WOULD TAKE 1% OF THE DEAL.

QUICK: THIS DEAL YOU DID TODAY --

BUFFET: THE ASSETS ARE PRICED ATTRACT ATTRACTIVELY NOW. THAT IS THE THEME THAT THEY'RE TOTAL LEAD PIPE CINCH, BUT IF YOU BUY THESE THINGS AT MARKET PRICES, IF YOU BUY WHAT MERRILL LYNCH SOLD AT 22 CENTS ON THE DOLLAR, YOU'RE LIKELY TO MAKE MONEY.

QUICK: THAT'S A MESSAGE THAT WE GET BACK AND FORTH FROM CONGRESSMEN ALL THE TIME. HAVE YOU SPOKEN TO ANYONE ON CAPITOL HILL ABOUT JUST THAT?

BUFFETT: NO I'VE SPOKEN TO SOME, SURE.

QUICK: AND YOU'VE TOLD THEM YOU'D BE INTERESTED IN TAKING 1% OF THAT DEAL?

BUFFETT: I DON'T THINK IT'S VERY FEASIBLE, BUT IF IT WERE OFFERED TO ME AND THEY WOULD BUY THE ASSETS AT MARKET PRICE AND I HAD TREASURY FUNDING COSTS, WHICH ARE VERY LOW, AND I HAD THE STAYING POWER OF THE TREASURY, WHICH IS INDEFINITE, YOU'RE GOING TO MAKE MONEY ON THEM.

QUICK: WHAT DRAWS YOU TO GENERAL ELECTRIC, WHAT CONCERNS YOU, BUT WHAT ALSO GOT YOU INTO THIS DEAL?

BUFFETT: GE IT'S THE BACKBONE OF AMERICAN INDUSTRY. I KNOW JEFF IMMELT AND I'VE KNOWN JACK WELCH WELL FOR

DECADES. THEY'VE GOT SOME MARVELOUS BUSINESSES. I'M SURE THEY HAVE SOME TROUBLES IN FINANCE, BUT THEY'VE BECOME TAINTED AS EVERY COMPANY THAT HAS TO BORROW MONEY ALL THE TIME.THEY'RE GOING TO BE AROUND FIVE OR TEN OR 100 YEARS FROM NOW.

AND IF YOU BUY IT AT THE RIGHT TIME, THEN YOU WILL PROBABLY MAKE SOME MONEY. NOW THAT DOESN'T SAY ANYTHING ABOUT WHERE STOCKS WILL BE IN THREE MONTHS OR SIX MONTHS. I THINK I KNOW WHAT WILL HAPPEN IN FIVE OR TEN YEARS. I JUST DON'T KNOW WHAT WILL HAPPEN IN FIVE OR TEN MONTHS.

QUICK: YOU TALKED FOR A LONG TIME ABOUT HOW YOU LIKED TO BUY THINGS YOU UNDERSTAND VERY WELL,THAT YOU SEE WELL, THINGS LIKE KRAFT, BUDWEISER, COCA-COLA, HOW DOES THIS FIT IN WITH THE REST OF YOUR PORTFOLIO?

BUFFETT: WELL BURLINGTON NORTHERN BUYS LOCOMOTIVES FROM THEM. AND WE BUY PLANES WITH THEIR ENGINES WE HAVE BOUGHT A LOT OF WIND TURBINES FROM GE. WE DO A LOT OF BUSINESS WITH GE. THEY TOUCH ALMOST ALL CORNERS OF THE AMERICAN ECONOMY. IN FACT, THEY TOUCH ALMOST ALL CORNERS OF THE INTERNATIONAL ECONOMY. IT IS A BIG, POWERFUL COMPANY THAT WILL TAKE SOME LOSSES IN THEIR FINANCE OPERATION AND THAT'S PART OF THE GAME, BUT THEY'VE GOT STAYING POWER AND A LOT OF THE BUSINESSES WILL BE WORTH MORE FIVE OR TEN YEARS FROM NOW.

QUICK: YOU'VE BEEN ON A SPENDING SPREE THIS YEAR. ANOTHER $3 BILLION ON THIS. IS THERE A POINT WHERE YOU SAY I'M NOT SPENDING ANYMORE OF MY CASH?

BUFFETT: WE WILL ALWAYS HAVE PLENTY OF CASH AROUND BERKSHIRE. I REGARD 10 BILLION AS A MINIMUM. I DO NOT WANT TO BE DEPENDENT ON

THE KINDNESS OF STRANGERS TOMORROW MORNING IN THIS KIND OF A WORLD. I WILL SPEND WHAT CONSIDER THE SURPLUS OF CASH I HAVE AT BERKSHIRE ANYTIME I GET OFFERED WHAT I THINK IS A SENSIBLE DEAL, BUT I WON'T GO BELOW A CERTAIN MINIMUM. I DON'T WANT TO COUNT ON BANKS LENDING ME MONEY OR COMMERCIAL PAPER COMING THROUGH OR ANYTHING OF THAT SORT. WE'LL ALWAYS KEEP 10 BILLION OF CONSOLIDATED CASH AROUND. AND WE WILL NEVER HAVE ANY SHORT TERM MATURITIES OF ANY CONSCIOUSNESS AT ALL. I LIKE SPENDING. I LIKE INVESTING AND I LIKE THE CHEAPER THINGS GET, THE BETTER I LIKE IT. THIS IS A GOOD PERIOD FOR US, ITS A GOOD PERIODS FOR ANYBODY -- GO AHEAD.

QUICK: GO AHEAD.

BUFFETT: WELL, AS LONG AS YOU DON'T BUY THINGS WITH BORROWED MONEY, IT'S A TERRIBLE MISTAKE TO USE BORROW MONEY IN INVESTMENTS IN MY VIEW, BUT IF YOU HAVE THE CASH. IF I BOUGHT A FARM A YEAR AGO AT $2,000 AN ACRE AND IF I GOT A CHANCE TO BUY THE FARM NEXT TO IT NOW AT $1400 AN ACRE NOW, I WOULD NOT PAY A LOT OF ATTENTION TO VARIOUS INDEXES. IF I LIKE THE INVESTMENT, I WOULD BUY MORE OF IT AND WE'RE GETTING A CHANCE TO BUY THINGS ON MORE ATTRACTIVE TERMS THAN WE COULD BUY THEM A YEAR OR TWO YEARS AGO, SO THAT'S WHERE WE ARE SPENDING MONEY.

QUICK: YOU'RE GETTING MORE ATTRACTIVE TERMS THAN YOU WOULD GET IF YOU WERE AN AVERAGE SHAREHOLDER WADING INTO THE MARKET. THEY LOOK AT YOU, WATCH WHAT YOU'VE DONE AND WONDER IF THEY FOLLOW SUIT. WHAT WOULD YOU TELL SOMEBODY IF THEY ASKED YOU THAT?

BUFFETT: I WOULD LOOK AT SPECIFIC SECURITIES WE BUY. IF I WERE THE AVERAGE INDIVIDUAL I WOULD LOOK AT WHATEVER BUSINESS I THOUGHT I UNDERSTOOD WELL OR FELT CONFIDENT ABOUT THE BUSINESS' LONG TERM PROSPECTS, WHERE I FELT CONFIDENT ABOUT THE MANAGEMENT AND WHERE I THOUGHT THE PRICE WAS ATTRACTIVE, I WOULD BUY IT, BUT NOT WITH BORROWED MONEY.

QUICK: THAT'S THE KEY? NOT BORROWED MONEY, NOT LEVERAGING UP?

BUFFET: YEAH. THERE'S NO WAY A SMART PERSON CAN GO BROKE EXPECT THROUGH BORROWED MONEY. ALL BORROW MONEY DOES DOES IS HELP YOU GET IT A LITTLE FASTER, BUT HELP YOU GET POORER A WHOLE LOT FASTER. IF YOU MAKE DECENT INVESTMENTS IN THINGS YOU UNDERSTAND, GOOD BUSINESSES, AT ATTRACTIVE PRICES, YOU'LL DO WELL OVER TIME.

QUICK: MR. BUFFETT, WE HAVE HEARD FROM PLENTY OF PEOPLE WHO HAVE WRITTEN US AND CALLED IN AND SAID THAT THEY'RE AGAINST THIS

RESCUE PLAN BECAUSE THEY THINK IT'S A BAILOUT FOR WALL STREET. YOU'VE COME OUT IN FAVOR, BUT HOW WOULD YOU EXPLAIN THIS TO THE AVERAGE AMERICAN WHO DOESN'T HAVE A LOT INVESTED IN THE STOCK MARKET. WHAT DO THEY HAVE AT STAKE?

BUFFETT: THERE IS NO QUESTION IT IS A RESCUE PLAN, BUT A RESCUE PLAN FOR THE AMERICAN ECONOMY NOT WALL STREET. IF YOU LOOK AT THE PEOPLE AT LEHMAN CORP OR AIG OR BEAR STEARNS, THE SHAREHOLDERS HAVE GOTTEN KILLED AND A LOT OF THE PEOPLE ARE LOSING JOBS OR BONUSES AND ALL KIND OF THINGS. THIS IS DESIGNED TO HELP THE AMERICAN ECONOMY FROM GOING INTO THE ULTIMATE TAIL SPIN, BUT WHEN CREDIT IS FROZEN AS IT HAS BEEN AND WHEN BANKS ARE UNWILLING TO LEND TO EACH OTHER AND WHEN 8% OF DEPOSITS HAVE BEEN

MOVED IN THE LAST FEW WEEKS TO SOLVENT INSTITUTIONS AND INCIPIENTLY SHELIA BAIR HAS DONE AN OUTSTANDING JOB IN MAKING THAT SEAMLESS, BUT THESE ARE -- THIS IS AN ECONOMIC PEARL HARBOR AND ONLY THE WHOLE WORLD WANTS TO DELEVERAGE.THE ONLY ENTITY IN THE WORLD THAT CAN MATCH THAT FORCE IS THE U.S. TREASURY.THEY ARE NOT DOING THIS FOR WALLSTREET.THIS IS BEING DONE FOR THE AMERICAN ECONOMY.

QUICK: IF YOU HAD ONE MESSAGE TO THE SENATORS VOTING TONIGHT ON THIS BILL?

BUFFETT: VOTE FOR WHAT'S IN THE INTEREST OF THE UNITED STATES CITIZENS AND I THINK A MAJORITY, A SUBSTANTIAL MAJORITY WILL COME

OUT ON THE SIDE OF VOTING FOR IT.

QUICK: WE WANT TO THANK YOU VERY MUCH FOR YOUR TIME. WE APPRECIATE YOUR TIME AND HOPE TO TALK TO YOU AGAIN SOON.

BUFFETT: THE GE ENGINES ARE PERFORMING MAGNIFICENTLY ON THIS PLANE.

QUICK: THAT'S GOOD TO KNOW. THANK YOU VERY MUCH, WARREN. THANKS.





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