Aug. 21 (Bloomberg) -- Big shots in finance get lots of chances to mouth off to the public from their bully pulpits. How they use that clout tells much about what they are made of.

Two money titans hit the op-ed trail this week. One of them, Berkshire Hathaway Inc. Chief Executive Officer Warren Buffett, offered constructive talk in the New York Times about why Congress must pay attention to the budget deficit once the U.S. economy gets back on its feet. The other, Charles R. Schwab, emoted in a whine-fest in the Wall Street Journal about regulators who are picking on the brokerage firm he founded.

Buffett, the statesman of the two, has often used his stature to weigh in on public-policy issues. He typically does it with humility and selflessness.

Take, for example, a 2003 article he wrote for Fortune magazine. Concerned about America’s trade deficit, Buffett said the gap was “selling the nation out from under us.” Before even mapping out his ideas to solve the problem, he conceded that his macroeconomic forecasting record was “far from inspiring,” taking shots at his previous economic concerns that turned out to be unwarranted.

Schwab has similarly tried to rally the masses on public- policy issues, albeit with none of Buffett’s self-effacing flair. In December, he wrote in forbes.com that Americans should increase their philanthropy in the midst of an economic crisis that was threatening charitable organizations. In the Wall Street Journal in the same month, he urged the Securities and Exchange Commission to implement a rule that might calm the financial markets.

‘Brokers Aren’t Responsible’

With his latest oeuvre, Schwab uses his business-guy celebrity to duck responsibility for customer losses and fudge the facts. Under the headline “Brokers Aren’t Responsible for Bad Bets” -- he could just as easily have deleted the last three words -- Schwab offered up his version of the reason that Schwab customers are stuck with auction-rate securities that they can’t cash in.

Schwab’s argument goes like this: His company mostly serves investors who make their own decisions. Some of those investors purchased auction-rate securities, known as ARS. The ARS market froze in February 2008 after operating “smoothly and reliably for over 20 years.” Charles Schwab Corp. didn’t create ARS and didn’t “actively market them,” he says, so it shouldn’t have to cough up the dough to make its clients whole.

Customer Guarantees

Yet New York Attorney General Andrew Cuomo sued Schwab on Aug. 17, demanding that it repay its investors. And if the mean old regulators are going to make Schwab’s innocent firm operate like an insurance company, guaranteeing everything their customers purchase, well, Schwab is just going to have to “severely limit” what it offers to those customers. So there!

Now, for a reality check.

First, we aren’t just talking about informed investors who picked up their phones and told some drone on the other end that they were aching to buy something. Cuomo’s 38-page complaint is awash with examples of brokers soliciting and misinforming investors about ARS. (Cuomo quoted from tape-recorded conversations). One broker called a customer who had a big cash balance in the money markets and suggested ARS. Customer: “I need the liquidity because, umm, I may buy a house soon.” Broker: “So why don’t you go with something like we call, uhh, the PARS, periodic auction rate securities.” They’re “very safe,” the broker said. Similar examples abound.

Schwab Denial

Schwab says his company neither created nor actively marketed ARS. CarMax didn’t make the cars it peddles, either, but it still inspects them before they go on the lot. CarMax customers get a 125-point vehicle inspection, which might not be a bad idea for some of the garbage Wall Street sells. As for the “we didn’t actively market them” argument, please re-read the conversation above.

Schwab warns that the scary government effort to “limit, if not eliminate” risks for small investors is going to turn his firm into more of an insurance company than a broker. No, Mr. Schwab. The idea is that the “company you can trust,” as you call it on your Web site, might train its brokers about the risks of the products they sell, and then instruct them to disclose those risks during sales pitches. If that had happened, Cuomo’s complaint would be bereft of those outrageous phone transcripts, and I’d be poking around for a different column.

Schwab and Buffett use their platforms in ways you might not expect, says Larry Cunningham, a professor at George Washington Law School in Washington, who has edited three collections of Buffett’s letters to shareholders. “Schwab and his business are really all about the ordinary American while Buffett operates in a much more rarified institutional zone,” he says. Yet Buffett communicates in accessible language that reaches the average person while Schwab is on a rant about why he doesn’t owe the little guy a refund.

John Kador, who wrote a book about Schwab, says the firm has veered from its original mission of serving self-directed investors, yet clings to the do-it-yourself image even as it sells products and gives advice. Schwab would be better served to apologize, admit its mistakes and move on, says Kador, whose most recent book “Effective Apology” might not be a bad addition for the Schwab chairman’s end-of-summer reading list.

(Susan Antilla is a Bloomberg News columnist. The opinions expressed are her own.)

To contact the writer of this column: Susan Antilla in New York at santilla@bloomberg.net

Last Updated: August 20, 2009 21:00 EDT