During Tuesday night’s presidential debate when asked who they would want to replace Hank Paulson as Treasury Secretary, both Barack Obama and John McCain said they thought Warren Buffett would be a good choice. (Good luck with that, McCain! Buffett is a major Democratic supporter.)
The Wall Street Journal’s Deal Journal blog thinks Buffett might actually be a good choice.
The Oracle of Omaha’s deal-making prowess is well-chronicled, but perhaps the most valuable aspect of his experience is that he drives a hard bargain. Consider how, in return for his investments in Goldman and GE, as well as the acquisition of Constellation Energy, he received warrants and expanded ownership in the companies, which should pay off richly in an upturn. He would need such negotiating skills as Treasury Secretary if the government negotiates to buy rafts of devalued mortgage-backed securities.
Buffett also has a knack for ending up on the winning side, even when you don’t expect him to be. That Midas touch–his Solomon Brothers experience aside–could be just the thing the federal government needs…
Meanwhile, we thought it was dubious that the Oracle of Omaha would decamp from his perch and take a major pay cut to solve the U.S.’s financial crisis—particularly after the government didn’t let him design a better bailout. Deal Journal remains similarly sceptical:
He would need to divest all of his stock holdings and/or set aside his ownership of Berkshire Hathaway. And Buffett has been able to run Berkshire Hathaway as he wishes and choose some deals while rejecting others; he wouldn’t get that privilege as Treasury Secretary, a job that requires so much cooperative work that it brought Hank Paulson down on one knee to beg Congress for help.
But the shrewd investor and bridge player is keeping his cards close to his vest, according to DealBook, which asked one of Buffett’s aides if he would even take the job.
DealBook: Asked about this, one of Mr. Buffett’s aides told Dealbook, “I tried to get a response from Mr. Buffett, and I just got a smile.”
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