2010 Berkshire Hathaway Annual Meeting (Full Version) | Summary and Q&A

Transcript

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Summary

Warren Buffett and Charlie Munger discuss earnings, introduce directors, and answer questions at the annual meeting. They address topics such as Berkshire's investment in Goldman Sachs, financial reform legislation, and collateral requirements for derivative contracts.

Questions & Answers

Q: What transaction do Buffett and Munger discuss first?

They discuss the Abacus transaction, in which Goldman Sachs and Abn Ambro were the main participants. Buffett explains the details of the transaction and the parties involved. He also emphasizes the importance of having proper knowledge and understanding when insuring bonds or guaranteeing credit.

Q: What does Buffett think about the allegation against Goldman Sachs?

Buffett does not hold the allegation against Goldman Sachs. He states that the allegation alone does not mean losing reputation. He also mentions the long-standing positive relationship between Berkshire Hathaway and Goldman Sachs, as well as the benefits of Berkshire's investment in the company's preferred stock.

Q: What are Buffett's thoughts on financial reform legislation?

Buffett acknowledges that he does not know the full impact of the pending financial reform legislation. He highlights the need for change in the regulatory system and the permissive nature of the previous system that contributed to the financial crisis. Buffett favors a more restricted and simplified mode of business for commercial banks and investment banks.

Q: How would collateral requirements affect Berkshire Hathaway?

Berkshire would not be required to post collateral for its existing derivative contracts under the current bill. Buffett believes that the chances of being deemed a danger to the system are low compared to other larger institutions. He also mentions that if collateral requirements were imposed retroactively, Berkshire would comply but would expect fair compensation for the change. Buffett and Munger express their opposition to retroactive collateral requirements and provide examples of other companies that share the same stance.

Q: How does Munger feel about collateral requirements in existing contracts?

Munger believes that it would be unfair and unconstitutional to require collateral in existing contracts, as it would be like changing the terms of a contract after it has been agreed upon. He points out that many companies, including IBM and Ford, oppose such requirements and mentions Berkshire's indifference to future collateral requirements as long as they are adequately compensated.