Warren Buffett Tells Taxpayers That They're Screwed

warren buffett

Warren Buffet told the Financial Crisis Inquiry Commission that U.S. taxpayers are screwed, no matter what.

The chairman of Berkshire Hathaway Inc., (NYSE: BRK-A) said that we’ll always have “too big to fail,” and no matter what, the U.S. tax dollar will be needed to back stop them.

“You will always have institutions that are too big to fail, and sometimes they will fail,” Buffett, told the FCIC in a May 26 interview. The report was released by the panel yesterday. Buffett went on to say, “We still have them now. We’ll have them after your commission report.”

The Dodd-Frank law, which was enacted in July, was supposed to prevent “too big to fail.” Buffett is saying that too big to fail will always happen. Federal Reserve Chairman Ben Bernanke, has previously said “too-big-to-fail” will stop when investors believe the U.S. government won’t rescue firms.

Buffett told the FCIC that he believed the U.S. would provide liquidity again if it was needed. Programs such as the Commercial Paper Funding Facility could quickly be reinstated if necessary.

“I do think that if you ran into a similar situation today the government would guarantee commercial paper again. They’d have to,” Buffett said. “You have to believe the government, the federal government, will act and they will act promptly and decisively.”

This isn’t to say that Buffett hasn’t profited from the crisis. Berkshire purchased preferred stock in Goldman Sachs (NYSE: GS) during the financial crisis which gets a 10% annual dividend. He was also granted warrants to buy $5 billion in common stock at $115 per share. Shares of Goldman are currently trading at $165.95 as of the time of this article.

“It was a bet essentially on the fact that the government would not really shirk its responsibility at a time like that,” Buffett said.

Sorry U.S. taxpayers. As long as we have our system set up the way it is, you’ll always be on the hook, and there will always be people to profit from you.

— By Roger Nachman

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.