Buffett Says Dimon Had to Bare Throat in Submission

Oct. 22 (Bloomberg) -- Warren Buffett, the billionaire chairman and chief executive officer of Berkshire Hathaway Inc., says JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon "has done a very good job" running the bank. Buffett speaks with Betty Liu on Bloomberg Television's In the Loop." (This is an excerpt from the interview. Source: Bloomberg)

Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc. (BRK/A), said JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon has little room to bargain as regulators probe the sale of faulty mortgage bonds.

“If you’re a financial institution and you’re threatened with criminal prosecution, you have no ability to negotiate,” Buffett told Bloomberg Television’s Betty Liu in an interview today. “Basically, you’ve got to be like a wolf that bares its throat, you know, when it gets to the end. You cannot win.”

Dimon reached a tentative $13 billion settlement to resolve civil disputes between JPMorgan and the U.S. government. The bank won’t be released from criminal liabilities, according to a person familiar with the talks who asked not to be identified because they were private. Some of the practices under the probe relate to Bear Stearns Cos. and Washington Mutual, which JPMorgan bought in 2008 as the housing bubble burst.

“I think $13 billion is a lot of money, and I think Jamie has done a very good job of running JPMorgan,” Buffett said. “He helped out the economy enormously when he took on Bear Stearns and he didn’t get an indemnification clause,” he said. “There wasn’t even time for that sort of thing.”

Photographer: Andrew Harrer/Bloomberg

Berkshire Hathaway Inc. Chairman Warren Buffett said "if you’re a financial institution and you’re threatened with criminal prosecution, you have no ability to negotiate." Close

Berkshire Hathaway Inc. Chairman Warren Buffett said "if you’re a financial institution... Read More

Close
Open
Photographer: Andrew Harrer/Bloomberg

Berkshire Hathaway Inc. Chairman Warren Buffett said "if you’re a financial institution and you’re threatened with criminal prosecution, you have no ability to negotiate."

U.S. Attorney General Eric Holder said this month that it is a priority for his department and President Barack Obama to aggressively pursue misdeeds by banks. JPMorgan won’t be penalized for wrongdoing tied to Bear Stearns and WaMu, a person familiar with the talks said. Rather, the portions of the settlement related to those institutions will be compensatory.

Financial Licenses

Because financial companies need to maintain licenses in U.S. states, they will make concessions to avoid a criminal indictment, Buffett said. The billionaire was interim chairman and CEO of Salomon Inc. in 1991 and 1992 as the company sought to recover from involvement in a Treasury debt auction scandal.

Buffett has praised Dimon in the past, saying he would be the best person to run the U.S. Treasury Department in a financial crisis. The billionaire has also said he has a personal stake in New York-based JPMorgan.

Dimon concurred with Buffett’s assessment of banks’ inability to sway regulators during a conference call with analysts this month. Still, he vowed to push for outcomes that would be fair to investors.

“It is very hard to fight with your regulators or the federal government, but we want them to be fair and reasonable,” Dimon said. “We have shareholders.”

Photographer: Scott Eells/Bloomberg

Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., left, Howard Buffett, president of Buffett Farms Inc., center, and Howard Warren Buffett, executive director of the Howard G. Buffett Foundation, stand for a photograph in New York. Close

Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., left,... Read More

Close
Open
Photographer: Scott Eells/Bloomberg

Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., left, Howard Buffett, president of Buffett Farms Inc., center, and Howard Warren Buffett, executive director of the Howard G. Buffett Foundation, stand for a photograph in New York.

‘Hungry World’

Buffett, 83, appeared alongside his son Howard today to promote “40 Chances: Finding Hope in a Hungry World.” The book describes lessons the billionaire’s son learned from his years working to improve food security around the world. It was written with Buffett’s grandson, also named Howard, and includes a foreword by the Berkshire chairman.

The elder Buffett has committed most of his wealth to charities overseen by his family and to a foundation run by his friends Bill and Melinda Gates. He said today that Bill Gates, the Microsoft Corp. (MSFT) co-founder, is so busy with philanthropic work that he won’t return to run the software company.

“The chances of that are zero,” Buffett told Liu. “He is doing exactly what he wants to do in life, and he’s doing it well and it takes his full-time energy.”

Microsoft is searching for a new CEO after Steve Ballmer said he would step down. Gates, 57, is chairman of the company and also serves on the board of Omaha, Nebraska-based Berkshire.

One of the messages of “40 Chances” is that charities missed opportunities to cooperate with for-profit enterprises, Howard Buffett said.

Recognizing Failure

“It’s changing today and that’s a good thing,” he told Liu. “Business has to be part of the solution. I think for a long time we failed to recognize that.”

Philanthropies should try to make themselves unnecessary and spend the money they have on tough problems rather than build an endowment, he said. His organization has set a goal of giving away more than $3 billion in 40 years as it works on mitigating conflicts and providing food and water security for some of the world’s most impoverished people.

“If you think about being out of business then you have more urgency to it, you focus better, you’ll select things that you’re best at and not try to be everything to everybody,” Howard Buffett said. “An endowment to me is really, in a way, a waste of money, because you ought to be spending it and using it and changing things.”

To contact the reporters on this story: Noah Buhayar in New York at nbuhayar@bloomberg.net; Zachary Tracer in New York at ztracer1@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.