September 18, 2009
The US economy has not begun to climb out of the worst recession since the Great Depression, but the "terror" that followed last year's near-collapse of the financial system is gone, due in part to government intervention, Warren Buffett said.
Buffett maintained a positive outlook on the government's much criticized Troubled Asset Relief Program (TARP) for banks, saying it may ultimately turn a profit for the government.
"At the moment we don't see (the economy) getting better or worse, but that's better than you could say six months ago," said the billionaire known as The Sage of Omaha for his long history of successful investments. "The terror of last year is gone and that's thanks in part to the government."
Buffett spoke to Reuters in a brief interview at the Fortune Most Powerful Women conference in Carlsbad, California.
"The economy has not turned up but it will turn up ... I just don't know when," Buffett said. "It could be tomorrow," he added.
He said the Obama administration was "making progress with TARP and may end up making a profit. It certainly won't be a disaster."
Some of the largest US banks will remain in the government's financial bailout program for months, as officials do not expect to grant the next wave of exit approvals until near the end of the year, according to a source familiar with the matter.
Ten banks received approvals in June to repay $68 billion in federal bailout funds, but there have been few clues about when the other large banks would be allowed to exit the program.
Banks such as Citigroup Inc and Bank of America Corp have been chafing under the government's reins and want out of the program, which delivered capital infusions to banks along with limits on pay, share repurchases and dividends.
"The banks want to get out of TARP ... they will all get out of TARP," Buffett said, adding that the time frame for exiting the program "is not a crucial factor."
In an interview aired on CNBC late on Tuesday, Buffett said he was contacted about providing financial assistance for Lehman Bros in the days before its failure a year ago, but never received documentation that he had asked to be faxed to him.
On Sept 15, 2008, Lehman filed for bankruptcy protection, and a day later American International Group Inc, which had been the world's largest insurer, received a massive US bailout that has since swelled to as much as $180 billion.
For AIG, he considered both a reinsurance transaction, and the purchase of a large property-casualty business. "I looked hard," he said, and quickly concluded the $25 billion price tag for the insurance business was more than he wished to pay.