During recent meeting in Maryland with 20 MBA students, the billionaire investor gave the former president credit for keenly understanding the stakes of the 2008 financial crisis.
“There was $3.5 trillion in money market funds and $175 billion of funds flowed out in the first three days after Lehman failed,” Mr. Buffett said in reply to a question about Goldman Sachs, according to the notes from the meeting. “All money market funds held commercial paper. Companies like GE had a lot of commercial paper. After this, American industry literally stopped. George Bush said, ‘If money doesn’t loosen up, this sucker will go down’ — I believe this was the greatest economic statement of all time.”
“This is why he backed up [former Treasury Secretary Henry] Paulson and [Federal Reserve chairman Ben] Bernanke,” Mr. Buffett said. “In September 2008, we came right to the abyss. If Paulson and Bernanke had not intervened, in two more days it would have been all over. BRK always has $20 billion or more in cash. It sounds crazy, never need anything like it, but some day in the next 100 years when the world stops again, we will be ready.”