The Motley Fool recently published an article entitled Why Would Warren Buffett Stoop So Low? which points out a potential conflict of interest between Buffett’s recent five billion dollar investment in Goldman Sachs and his recent comments in support of the bailout package. As the Fool rightly points out:
“By reserving public comment until after he stood to benefit from it, Buffett looks less like an advocate of reason and more like someone out to make a quick buck.”
If this were the first time that such a conflict had occurred, I might see fit to give him the benefit of the doubt, but it isn’t.
Earlier this year, Buffett started the Berkshire Hathaway Assurance Corporation (BHAC) as a provider of municipal bond insurance. Shortly after starting the company, Moody’s gave BHAC its highest rating. And it turns out that Berkshire Hathaway owns a good chunk of Moody’s stock, as it represents about 3.6% of Bershire’s holdings.
So here we see a rating company that’s effectively giving one of its largest investors a gold star. Seems like a clear conflict of interest to me.
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