Munger Says Bankers’ ‘Megalomania, Insanity’ Fueled U.S. Property Bubble
“The bubble in America was caused by some combination of megalomania, insanity and evil in, I would say, investment banking, mortgage banking,” Munger, 87, said today at a conference in Pasadena, California.
Munger is hosting a “Morning With Charlie” to replace the annual shareholder meeting of Wesco Financial Corp., the Berkshire unit that he ran as chief executive officer. Wesco is no longer publicly traded after Berkshire, led by Chairman Warren Buffett, acquired its remaining stock last month.
Munger used the meeting to fault ex-Lehman Brothers Holdings Inc. CEO Richard Fuld and to call for effective financial regulation. Munger, a Republican, praised Elizabeth Warren, the adviser who was appointed by President Barack Obama to set up the Consumer Financial Protection Bureau, and said there was too little oversight under ex-Federal Reserve Chairman Alan Greenspan.
Greenspan, who was chairman from 1987 to early 2006, nurtured a devotion to free markets in part through his association with Ayn Rand, the novelist and philosopher who espoused laissez-faire capitalism. Greenspan told Congress a month after Lehman’s 2008 failure that a “once-in-a-century credit tsunami” had engulfed financial markets and conceded his free-market ideology shunning regulation was flawed.
“Alan Greenspan is a smart man,” Munger said. “He just totally overdosed on Ayn Rand at a young age.”
Today’s question-and-answer session with Munger may be the last of its kind, the Omaha World-Herald reported last month. “This is likely to be the swan song,” Munger told the newspaper. “I’m 87 years old, and there comes a time.”
Munger helped Buffett, 80, build Omaha, Nebraska-based Berkshire into a $190 billion company in industries from insurance to railroads. Munger, who joins Buffett taking questions at Berkshire’s annual meetings, began today’s event with remarks on regulation and bankers such as Fuld.
“I would guess that Dick Fuld has not a single ounce of contrition wherever he sits today,” Munger said.
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