沃
伦・巴菲特(Warren Buffett)相信自己在自1929年大萧条以来最惨重的经济危机中所做的最佳交易决定很可能是最终选择不做某些交易。过去那段日子在他赫赫有名的职业生涯中实属艰难，他拒绝了一个又一个机会。他说，正是这股推动力使得他在上个月积聚了所需能量，完成了自己个人历史上最大一笔交易──伯克希尔哈撒韦公司(Berkshire Hathaway Inc.)斥资263亿美元收购铁路公司Burlington Northern Santa Fe Corp。
金融危机爆发后的艰难时期里，巴菲特的投资天赋依旧帮助他不断做出英明的选择。切尔西・哈伯德(Kelsey Hubbard)和斯科特・帕特森(Scott Patterson)讨论了一年来巴菲特的一些较大赌注，其中也包括他的几笔失败投资。
这位79岁的投资巨匠回忆道，我在1942年买了自己的第一只股票，眼下的这列过山车超越了我以往见到的任何一样东西；我们做的事情不都是聪明到极点，也不都是十足的愚蠢。
2008年3月28日，身为伯克希尔哈撒韦董事长的巴菲特接到了时任雷曼兄弟(Lehman Brothers)首席执行长理查德・福尔德(Richard Fuld)的电话。福尔德想知道巴菲特是否会给这家投行注资约40亿美元，以止住其亏损。
当晚，巴菲特在自己位于内布拉斯加州奥马哈的办公室里仔细研读了雷曼兄弟的年度财务报表。他在封页上记下了有令人不安的信息的页码，等他读完报表，封页上已满是页码了。于是巴菲特没有"咬钩"。六个月后，雷曼兄弟申请了破产保护。
巴菲特回忆道，在那些日子里，所有的人都在找钱。
巴菲特并没有拒绝所有的人。他分别为高盛集团(Goldman Sachs Group Inc.)和通用电气(General Electric Co.)投资了50亿和30亿美元。但是对伯克希尔哈撒韦的股东来说，那些他拒绝的交易才是更有看头。
金融服务公司Janney Montgomery Scott分析师霍华德(Paul Howard)说，我认为人们对巴菲特拒绝了很多注资请求没有给予足够的赞赏。他收到过太多注资的请求。
拒绝雷曼与房地美
有一些投资者的确在市场动荡期间签署了一些大型交易，但最后是搬起石头砸了自己的脚。全球最大私募股权公司之一的TPG在对华盛顿互惠银行（Washington Mutual）的投资中亏损了13.5亿美元。2007年年末，阿联酋投资者向花旗集团(Citigroup Inc.)投资了数十亿美元，该行的股票出现了跳水。
通过采访巴菲特以及联系过他的公司的代表，可以看出巴菲特究竟是如何在金融危机环境下对交易进行衡量和评估的。
救援请求从2008年3月15日星期六开始。巴菲特在伯克希尔哈撒韦的总部接到了纽约私募股权投资者弗劳尔斯(J. Christopher Flowers)打来的电话。当时弗劳尔斯正联手一个银行家团队试图对苦苦挣扎的投行贝尔斯登(Bear Stearns Cos.)进行最后的营救。
巴菲特大概听他说了十分钟，然后就表示自己不感兴趣。翌日，摩根大通(J.P. Morgan Chase & Co.)敲定了接管贝尔斯登的交易。
两周后，巴菲特拒绝了福尔德的注资请求。福尔德没有回复记者的置评要求。
由于住房市场坍塌，那些握有大量住房抵押贷款支持证券的公司开始变得摇摇欲坠。代表房地美的摩根士丹利银行家联系到了巴菲特，请他进行投资，但他认为房地美的问题太过严重。
他回忆道，我很快就说了不。
当年晚些时候，美国财政部接管了房地美和它姊妹公司房利美(Fannie Mae)。房地美发言人拒绝就公司曾经联系巴菲特一事发表评论。
巴菲特说金融危机全面爆发的2008年9月是他职业生涯最忙碌的月份之一。先是美联银行(Wochovia)时任首席执行长斯蒂尔(Robert Steel)请求投资100亿美元。巴菲特认为美联银行是在楼市最火爆时期不计后果地投身次贷市场，于是拒绝了这一要求。
美联银行最后被贱卖给了富国银行(Wells Fargo & Co.)，伯克希尔哈撒韦持有后者部分股权。富国银行发言人拒绝就此置评。
AIG的问题太复杂
到了9月12日，四面楚歌的保险巨头美国国际集团(AIG)时任首席执行长维尔伦斯坦德(Robert Willumstad)致电巴菲特，请求投资约50亿美元。
巴菲特说自己清楚AIG需要快速筹集资金。他回忆道，我对维尔伦斯坦德说你就别在我这儿浪费时间了。
维尔伦斯坦德说，基本上，巴菲特的意思是AIG的问题太复杂了。
不过，巴菲特同意考虑对AIG的部分财产及意外险业务提出收购建议。当日晚些时候，维尔伦斯坦德回电，问巴菲特想不想"一锅端"？他指的是AIG旗下所有财产及意外险部门，他开价为250亿美元。
巴菲特表示，他将看一下交易的相关信息。然后他很快得出结论说，这笔交易太大，如果参与，伯克希尔要借一大笔钱，可能会危及其宝贵的AAA信用评级。
第二天巴菲特飞往加拿大的埃德蒙顿，参加一场由歌星席尔(Seal)和保罗・安卡(Paul Anka)主打、为有儿童需要器官移植的家庭筹款的慈善音乐会。大约晚上6点，他在酒店里接到了巴克莱(Barclays PLC)总裁戴蒙德(Robert Diamond Jr.)和曾在花旗任职的顾问克莱恩(Michael Klein)打来的电话。两位银行家正努力在最后关头达成一项巴克莱收购雷曼的协议，彼时雷曼正面临着破产的危险。
他们告诉巴菲特，英国监管方不会在没有股东批准的情况下批准这样大的一桩交易，而股东的批准可能需要数日，甚至是数周。监管方担心雷曼的交易对手会出现恐慌，不愿意跟这家银行有任何新的业务往来。可不可以付钱给巴菲特为雷曼的交易仓位担保，直到股东表决？
巴菲特需要去参加音乐会。他让两位银行家给他发一份列出了交易条款的传真。巴菲特大约半夜回到酒店的时候，没有看到任何传真，这笔交易就这样石沉大海。
克莱恩曾经给巴菲特的手机上留了一条信息。但巴菲特说，他手机用得不多，所以他根本就没有意识到手机上有那条短信。他说他一直没有看到，10个月过后女儿苏珊・巴菲特才发现了它。巴菲特拒绝谈论克莱恩信息的内容，只是说就算当晚收到短信，也不会导致一项交易的达成。
戴蒙德和克莱恩没有回应置评请求。
巴菲特变得沉默寡言
就在那个周末，有关AIG的另外一项交易也在运作之中。伯克希尔公司负责批量再保险业务的高管贾因(Ajit Jain)，与弗劳尔斯和纽约私募巨头Kohlberg Kravis Roberts & Co.牵头的投资团队进行了会谈。他们希望一起达成一项协议为AIG的某些部门提供再保险，从而部分缓解AIG的资金紧张。
周日回到奥马哈过后，巴菲特以为交易可能会达成，于是前往当地乡村俱乐部Happy Hollow Club，与谷歌创始人之一布林(Sergey Brin)及其夫人共进晚餐。他打算晚餐过后再研究交易的条款。但交易告吹了，因为事实证明，AIG的财务困境实在太严重、太复杂。当周晚些时候，美国政府宣布了一项850亿美元的救援计划。这时巴菲特才开始对整个金融系统感到担忧。据一位当时经常和巴菲特谈话的人讲，在电话交谈中，一向能言善辩的巴菲特变得沉默寡言，听起来紧张兮兮的。
投行巨头摩根士丹利和高盛的股价都在止不住地下跌，因为人们担心它们会成为下一批倒闭的公司。帮助全国企业为维持日常运转融资的商业票据市场，陷入了停顿。9月16日，因持有雷曼商业票据等原因，大型货币市场基金Reserve Primary Fund曝出重大亏损。
巴菲特说，当时如果商业票据市场完全冻结，那么更多主要金融机构、甚至上千家像通用电气这样的品牌都已经倒掉了，因为它们的支票将无法结清。如果真是这样，持有资产约3.5万亿美元的美国货币市场基金将会出现恐慌，因为其中部分基金持有商业票据。巴菲特总结说，由此导致的混乱可以让全球金融市场崩溃，从而危及伯克希尔公司。
巴菲特回忆说，我感觉这是我从来没有见过的景象，美国公众和国会都没有完全领会问题的严重性；我想，我们眼前真的是万丈深渊。
在奥马哈一位富豪朋友的生日聚会上，几位客人问巴菲特，他们的货币市场基金是否安全。巴菲特觉得这些问题让人担心，因为它们说明，长期以来被视为坚不可摧的货币市场基金，其安全性问题也引起了人们的普遍担忧。
他说，当开劳斯莱斯的人们都在为自己的财产而担心时，你就知道出了麻烦。
9月19日早晨，摩根士丹利首席执行长麦晋桁(John Mack)致电巴菲特，希望安排一项交易，可能是为摩根士丹利提供一个巨额信用额度。没有谈到具体条款。巴菲特对麦晋桁说，他没有兴趣，因为他对这家银行不够熟悉。
巴菲特说，他仍然认为政府有阻止灾难发生的办法。他与政府官员保持紧密联系，曾接到时任财政部长的鲍尔森(Henry Paulson)的电话。当时鲍尔森正在制定银行业救助方案，希望倾听巴菲特对构造这一方案有何想法。寻求对该方案指导意见的参议员也曾打电话给他。
巴菲特回忆道，由于政府迅速采取行动，他增强了对这场危机将会化解的信心。他说，在货币市场基金Reserve风波爆发几天后，政府对货币市场基金资产的担保是前进了一大步。
9月底时，巴菲特决定出击。
投资高盛
同摩根士丹利一样，高盛也需要现金。高盛向他提了几个交易设想，但都没有打动他。不过他并没有彻底回绝，原因之一在于他熟悉高盛的业务，在各种交易上曾与高盛合作多年。
9月23日，高盛银行家特罗特(Byron Trott)致电巴菲特询问如何才能达成交易。他曾长期与巴菲特保持着密切的合作关系。
巴菲特列出了他的条件。几小时后协议即告达成。伯克希尔哈撒韦公司以10%的年股息率购买了50亿美元的高盛优先股，以及以每股115美元购买50亿美元高盛股票的认股权证。如今高盛的股价约为166美元。
巴菲特说，这项协议在某种程度上是出于对政府将遏制可能危及到高盛这种公司的金融灾难的信心。另一个因素是：对伯克希尔哈撒韦公司很具吸引力的条款。
在这项交易完成后不久，巴菲特同意以10%的年股息率购买30亿美元的通用电气优先股。他还得到了以每股22.25美元购买30亿美元通用电气普通股的权利。通用电气股价上周五上涨0.31美元，收于15.92美元。
在向这些交易投入了80亿美元之后，巴菲特发起了公关攻势，目的主要是为了提振市场，并敦促政府采取强有力的行动。
在公立电视访谈节目The Charlie Rose Show中，巴菲特将市场的动荡称为"经济珍珠港"，并重申了他对美国长期保持优势地位的信念。他在《纽约时报》(New York Times)发表文章说，他在通过个人账户购买美国股票。
10月6日，他致信财政部长鲍尔森，提出了帮助金融体系消除银行持有的数十亿美元有毒抵押贷款资产所造成压力的计划。他建议汇集包括伯克希尔哈撒韦公司在内的私人资产同财政部资金一道购买银行的按揭证券。
据知情人士说，鲍尔森认为这是"一个好主意的种子"，但美国财政部当时忙于当救火队员，没有进一步采取行动。
股市的持续下跌让伯克希尔哈撒韦公司付出了代价。
"我犯了很多错误"
今年2月，该公司公布每股账面价值在2008年下降了9.6%，为巴菲特1965年执掌伯克希尔哈撒韦公司以来的最大跌幅。它持有的股票损失惨重，其中包括美国运通公司(American Express Co.)和穆迪公司(Moody's Corp.)，它卖给保险客户的防止全球股指长期下跌的衍生品合约也出现了巨额帐面亏损。
最沉重的打击发生在4月份，当时穆迪取消了伯克希尔哈撒韦公司的AAA评级，理由是股市的下跌。此举制约了伯克希尔哈撒韦公司庞大的保险业务，使其难以销售防止重大亏损的保单。伯克希尔哈撒韦的股价也大幅下挫，自2008年9月中旬以来下跌了约30%。
分析师说，与Burlington的交易降低了伯克希尔哈撒韦的利润增长潜力，因为铁路基本上跟踪的是整体经济的增长。但它也降低了伯克希尔哈撒韦公司在风险较大的金融业务上的投资比例，可能会在下次危机来临之际夯实基础。
巴菲特对他在金融危机期间的决定存在一些遗憾。他说，如果他等到2009年3月市场触底时才动用他的现金，他就会大赚一票了。
巴菲特说，我犯了很多错误。我没有利用混乱带来的机会实现最大化。但最终，结果还算差强人意。
Scott Patterson
http://cn.wsj.com/gb/20091216/ffe085640.asp
Warren Buffett believes his best deals during the economy's biggest belly flop since the Crash of 1929 may well turn out to be the ones he didn't do.
Mr. Buffett slammed the door on one opportunity after another during the most harrowing stretch of his storied career. That impulse, he says, left him with the financial firepower he needed last month to strike the biggest deal he has ever done -- Berkshire Hathaway Inc.'s $26.3 billion purchase of railroad Burlington Northern Santa Fe Corp.
In a series of interviews with The Wall Street Journal, Mr. Buffett gave his most complete account of his epic deal negotiations, including anxious phone calls he fielded from wounded companies such as Freddie Mac, Wachovia Corp. and Morgan Stanley.
'I bought my first stock in 1942, and this roller coaster surpassed anything that I've seen,' says the 79-year-old investor. 'We didn't do all the smartest things. We didn't do anything really dumb.'
On March 28, 2008, Mr. Buffett, Berkshire's chairman, took a call from Richard Fuld, then head of Lehman Brothers Holdings Inc. Mr. Fuld wanted to know whether Mr. Buffett would inject about $4 billion into the investment bank to stanch losses.
That night, in his offices in Omaha, Neb., Mr. Buffett pored over Lehman's annual financial report. On the cover, he jotted down the numbers of pages where he found troubling information. When he was done, the cover was dotted with numbers. He didn't bite. Six months later, Lehman filed for bankruptcy protection.
'Everybody was looking for money in those days,' Mr. Buffett recalls.
He didn't say no to everyone. He invested $5 billion in Goldman Sachs Group Inc. and $3 billion in General Electric Co. But for Berkshire shareholders, the bigger story may be the deals that he passed up.
'I don't think Buffett gets enough credit for all the pitches he doesn't swing at,' says Paul Howard, an analyst at Janney Montgomery Scott. 'And he gets a lot of pitches.'
Some investors did strike big deals during the market turmoil, to their detriment. TPG, one of the world's largest private-equity firms, lost $1.35 billion on struggling thrift Washington Mutual Inc. In late 2007, investors in Abu Dhabi plowed billions into Citigroup Inc., whose shares plunged.
This account of Mr. Buffett's vetting of deals during the financial crisis was pieced together from interviews with him and representatives of some companies that approached him.
The requests for bailout financing began March 15, 2008, a Saturday. Mr. Buffett received a call at Berkshire's headquarters from New York private-equity investor J. Christopher Flowers. Mr. Flowers and a team of bankers were trying to arrange a last-minute buyout of Bear Stearns Cos., the struggling investment bank.
After listening to a pitch for about 10 minutes, Mr. Buffett said he wasn't interested. The next day, J.P. Morgan Chase & Co. struck its own deal to take over Bear.
Two weeks later, Mr. Buffett rebuffed the request from Lehman's Mr. Fuld. Mr. Fuld didn't respond to requests for comment.
As the housing market cratered, companies laden with securities backed by home mortgages were teetering. Later that spring, Morgan Stanley bankers representing Freddie Mac, the mortgage giant, reached out to Mr. Buffett for an investment. He thought Freddie Mac's troubles were too severe.
'I said no fast on that one,' he recalls.
The Treasury Department took over Freddie and its sister lender, Fannie Mae, later that year. A spokesman for Freddie declined to comment on its request to Mr. Buffett.
Mr. Buffett remembers September 2008, when the financial crisis came to a head, as one of the most hectic months of his career. It started with a request from Robert Steel, then the chief executive of Wachovia, for an investment of as much as $10 billion. Mr. Buffett, who thought Wachovia had recklessly dived into subprime mortgages during the housing boom, turned him down.
Wachovia eventually was purchased in a fire sale by Wells Fargo & Co., in which Berkshire is a stockholder. A spokesman for Wachovia declined to comment.
Then, on Sept. 12, a Friday, Robert Willumstad, then the chief executive officer of troubled insurer American International Group Inc., called to ask Mr. Buffett for an investment of about $5 billion.
Mr. Buffett says he was aware AIG needed to raise capital quickly. 'Don't waste your time on me,' he recalls telling the AIG chief.
Mr. Willumstad says Mr. Buffett 'basically said the company was too complicated.'
Mr. Buffett did, however, agree to consider making an offer for some of AIG's property-and-casualty businesses. Later that evening, Mr. Willumstad called back. 'How about the whole thing?' he recalls asking Mr. Buffett, referring to all of AIG's property-and-casualty businesses. He said the price was $25 billion.
Mr. Buffett said he would look over information about the deal. He swiftly concluded it was too big. Berkshire would have to borrow a lot of money, potentially threatening its coveted AAA credit rating.
The next day, Mr. Buffett flew to Edmonton, Canada, for a charity concert, headlined by Seal and Paul Anka, for families with children who need organ transplants. At about 6 p.m., he got a call at his hotel from Barclays PLC President Robert Diamond Jr. and an adviser, former Citigroup Inc. banker Michael Klein. The bankers were trying to broker a last-minute deal for Barclays to buy Lehman, which was facing bankruptcy.
U.K. regulators wouldn't approve such a large deal without shareholder approval, they told Mr. Buffett, which could take several days or even weeks. Regulators were worried that Lehman's trading partners would panic, refusing to do any more business with the bank. Would Mr. Buffett, for a fee, guarantee Lehman's trading positions until a shareholder vote?
Mr. Buffett needed to leave for the concert. He asked the bankers to send him a fax laying out deal terms. When he returned to his hotel around midnight, he didn't find any fax, so the deal went nowhere.
Mr. Klein had left a message on Mr. Buffett's cellphone. But Mr. Buffett says he doesn't use cellphones much, so he didn't even realize the message was there. He says he didn't get it until 10 months later, when his daughter, Susan Buffett, discovered it. He declines to discuss what Mr. Klein's message was, other than to say that receiving it that night wouldn't have led to a deal.
Messrs. Diamond and Klein didn't respond to requests for comment.
That same weekend, another AIG deal was in the works. Berkshire executive Ajit Jain, who runs its massive reinsurance unit, held discussions with an investment group led by Mr. Flowers and Kohlberg Kravis Roberts & Co., the New York private-equity giant. They were trying to line up a deal to provide reinsurance for some AIG operations, which would have eased some of the company's capital constraints.
Back in Omaha on Sunday, Mr. Buffett thought a deal was likely and left for a dinner at the Happy Hollow Club, a local country club, with Google Inc. co-founder Sergey Brin and Mr. Brin's wife. He expected to review the terms afterwards. But the deal fell through because AIG's financial troubles proved too severe and complex. Later that week, the U.S. government announced an $85 billion bailout. By this point, Mr. Buffett was beginning to worry about the entire financial system. In phone conversations, the normally loquacious Mr. Buffett was less talkative and sounded nervous, according to one person who was speaking with him regularly at the time.
Shares of giant investment banks Morgan Stanley and Goldman Sachs were spiraling lower amid worries that they would be the next firms to fail. The commercial-paper market, which helps finance the day-to-day operations of businesses around the country, was seizing up. On Sept. 16, the Reserve Primary Fund, a big money-market fund, revealed huge losses, due in part to holdings of Lehman's commercial paper.
If the commercial-paper market had frozen completely, more major financial institutions and possibly even household names such as GE would have failed, Mr. Buffett says, 'because their checks would have failed to clear.' That would have triggered panic in the nation's money-market funds, which held about $3.5 trillion in assets, because some of them held commercial paper. The resulting chaos, Mr. Buffett concluded, could have crashed global financial markets, threatening Berkshire.
'I felt that this is something like I've never seen before, and the American public and Congress don't fully understand the gravity' of the problems, he recalls. 'I thought, we are really looking into the abyss.'
At a birthday party for a wealthy friend in Omaha, several guests asked Mr. Buffett if their money-market funds were safe. He found the questions worrisome: They suggested widespread fears about the safety of funds long perceived to be invulnerable to losses.
'When people who drive Rolls-Royces are worrying about their piggy banks, you know you've got a problem,' he says.
On the morning of Sept. 19, Morgan Stanley Chief Executive John Mack phoned Mr. Buffett in hopes of arranging a deal, possibly a large credit line Morgan could tap. Exact terms weren't discussed. Mr. Buffett told Mr. Mack he wasn't interested because he wasn't familiar enough with the bank.
Mr. Buffett says he still felt the government had the tools to head off calamity. He stayed in close touch with government officials, fielding phone calls from then-Treasury Secretary Henry Paulson, who was cobbling together a bank-bailout package and was interested in Mr. Buffett's thoughts about structuring it. Senators seeking guidance about the package also phoned him.
As the government swung into action, Mr. Buffett recalls, he gained confidence that the crisis would be resolved. A government guarantee of assets in money-market funds, which came days after the Reserve fund's troubles emerged, was a big step forward, he says.
In late September, Mr. Buffett decided to strike.
Goldman Sachs, like Morgan Stanley, was in need of cash. The bank already had made several pitches to him. None had enticed him. But he remained open to offers, partly because he was familiar with Goldman's operations, having worked with the bank for many years on various deals.
On Sept. 23, Goldman banker Byron Trott, who had long worked closely with Mr. Buffett, called to ask what it would take to do a deal.
Mr. Buffett laid out his terms. Hours later a deal was struck. Berkshire purchased $5 billion of Goldman preferred shares with a 10% annual dividend, as well as warrants to buy $5 billion worth of Goldman shares for $115 apiece. The shares now trade at about $166.
The deal, Mr. Buffett says, was based partly on his faith that the government would stave off the kind of financial catastrophe that could have endangered even Goldman. Another factor: attractive terms for Berkshire.
Not long after that deal, Mr. Buffett agreed to buy $3 billion of General Electric preferred shares with a 10% annual dividend. He also got the right to buy $3 billion of common stock at $22.25. GE's shares rose 31 cents Friday to $15.92 on the New York Stock Exchange.
Having put $8 billion into those deals, Mr. Buffett went on a public-relations offensive, in what appeared to be an effort to bolster markets and urge the government to take strong action.
On public television's 'The Charlie Rose Show,' he called the market turmoil an 'economic Pearl Harbor' and reiterated his faith in the nation's long-term strength. In a New York Times opinion piece, he wrote that he was buying U.S. stocks in his personal account.
On Oct. 6, he sent a letter to Treasury's Mr. Paulson laying out a plan for relieving the financial system from some of the pressure created by billions of dollars of toxic mortgage assets held by banks. He proposed pooling private assets, including Berkshire's, with Treasury funds to purchase mortgage securities from banks.
Mr. Paulson thought it was 'the seed of a good idea,' says one person familiar with the matter, but the Treasury was scrambling to put out brush fires and didn't have time to pursue it.
Continuing stock-market declines were taking a toll on Berkshire.
In February, the company reported that its book value per share -- a measure of asset values it uses to gauge performance -- had dropped 9.6% in 2008. That was the steepest decline since Mr. Buffett took over Berkshire in 1965. It suffered major losses on its stock holdings, including American Express Co. and Moody's Corp., and a big paper loss on derivative contracts it had written to insure customers against long-term declines in global stock indexes.
The toughest blow came in April, when Moody's stripped Berkshire of its AAA rating, citing the stock-market decline. The move has constrained Berkshire's vast insurance operations from writing some policies against major losses. Berkshire's stock also has suffered, down about 30% since mid-September 2008.
The Burlington railroad deal reduced Berkshire's earnings-growth potential, analysts say, since railroads tend to track overall economic growth. But it also trimmed Berkshire's exposure to risk-prone financial operations, potentially giving it a more solid foundation for when the next crisis hits.
Mr. Buffett has some regrets about his decisions during the financial crisis. He says if he'd waited to deploy his cash until March 2009, when the market hit bottom, he could have made a killing.
'I made plenty of mistakes,' he says. 'I didn't maximize the opportunities offered by the chaos. But in the end, it worked out OK.'
Scott Patterson
Mr. Buffett slammed the door on one opportunity after another during the most harrowing stretch of his storied career. That impulse, he says, left him with the financial firepower he needed last month to strike the biggest deal he has ever done -- Berkshire Hathaway Inc.'s $26.3 billion purchase of railroad Burlington Northern Santa Fe Corp.
In a series of interviews with The Wall Street Journal, Mr. Buffett gave his most complete account of his epic deal negotiations, including anxious phone calls he fielded from wounded companies such as Freddie Mac, Wachovia Corp. and Morgan Stanley.
'I bought my first stock in 1942, and this roller coaster surpassed anything that I've seen,' says the 79-year-old investor. 'We didn't do all the smartest things. We didn't do anything really dumb.'
On March 28, 2008, Mr. Buffett, Berkshire's chairman, took a call from Richard Fuld, then head of Lehman Brothers Holdings Inc. Mr. Fuld wanted to know whether Mr. Buffett would inject about $4 billion into the investment bank to stanch losses.
That night, in his offices in Omaha, Neb., Mr. Buffett pored over Lehman's annual financial report. On the cover, he jotted down the numbers of pages where he found troubling information. When he was done, the cover was dotted with numbers. He didn't bite. Six months later, Lehman filed for bankruptcy protection.
'Everybody was looking for money in those days,' Mr. Buffett recalls.
He didn't say no to everyone. He invested $5 billion in Goldman Sachs Group Inc. and $3 billion in General Electric Co. But for Berkshire shareholders, the bigger story may be the deals that he passed up.
'I don't think Buffett gets enough credit for all the pitches he doesn't swing at,' says Paul Howard, an analyst at Janney Montgomery Scott. 'And he gets a lot of pitches.'
Some investors did strike big deals during the market turmoil, to their detriment. TPG, one of the world's largest private-equity firms, lost $1.35 billion on struggling thrift Washington Mutual Inc. In late 2007, investors in Abu Dhabi plowed billions into Citigroup Inc., whose shares plunged.
This account of Mr. Buffett's vetting of deals during the financial crisis was pieced together from interviews with him and representatives of some companies that approached him.
The requests for bailout financing began March 15, 2008, a Saturday. Mr. Buffett received a call at Berkshire's headquarters from New York private-equity investor J. Christopher Flowers. Mr. Flowers and a team of bankers were trying to arrange a last-minute buyout of Bear Stearns Cos., the struggling investment bank.
After listening to a pitch for about 10 minutes, Mr. Buffett said he wasn't interested. The next day, J.P. Morgan Chase & Co. struck its own deal to take over Bear.
Two weeks later, Mr. Buffett rebuffed the request from Lehman's Mr. Fuld. Mr. Fuld didn't respond to requests for comment.
As the housing market cratered, companies laden with securities backed by home mortgages were teetering. Later that spring, Morgan Stanley bankers representing Freddie Mac, the mortgage giant, reached out to Mr. Buffett for an investment. He thought Freddie Mac's troubles were too severe.
'I said no fast on that one,' he recalls.
The Treasury Department took over Freddie and its sister lender, Fannie Mae, later that year. A spokesman for Freddie declined to comment on its request to Mr. Buffett.
Mr. Buffett remembers September 2008, when the financial crisis came to a head, as one of the most hectic months of his career. It started with a request from Robert Steel, then the chief executive of Wachovia, for an investment of as much as $10 billion. Mr. Buffett, who thought Wachovia had recklessly dived into subprime mortgages during the housing boom, turned him down.
Wachovia eventually was purchased in a fire sale by Wells Fargo & Co., in which Berkshire is a stockholder. A spokesman for Wachovia declined to comment.
Then, on Sept. 12, a Friday, Robert Willumstad, then the chief executive officer of troubled insurer American International Group Inc., called to ask Mr. Buffett for an investment of about $5 billion.
Mr. Buffett says he was aware AIG needed to raise capital quickly. 'Don't waste your time on me,' he recalls telling the AIG chief.
Mr. Willumstad says Mr. Buffett 'basically said the company was too complicated.'
Mr. Buffett did, however, agree to consider making an offer for some of AIG's property-and-casualty businesses. Later that evening, Mr. Willumstad called back. 'How about the whole thing?' he recalls asking Mr. Buffett, referring to all of AIG's property-and-casualty businesses. He said the price was $25 billion.
Mr. Buffett said he would look over information about the deal. He swiftly concluded it was too big. Berkshire would have to borrow a lot of money, potentially threatening its coveted AAA credit rating.
The next day, Mr. Buffett flew to Edmonton, Canada, for a charity concert, headlined by Seal and Paul Anka, for families with children who need organ transplants. At about 6 p.m., he got a call at his hotel from Barclays PLC President Robert Diamond Jr. and an adviser, former Citigroup Inc. banker Michael Klein. The bankers were trying to broker a last-minute deal for Barclays to buy Lehman, which was facing bankruptcy.
U.K. regulators wouldn't approve such a large deal without shareholder approval, they told Mr. Buffett, which could take several days or even weeks. Regulators were worried that Lehman's trading partners would panic, refusing to do any more business with the bank. Would Mr. Buffett, for a fee, guarantee Lehman's trading positions until a shareholder vote?
Mr. Buffett needed to leave for the concert. He asked the bankers to send him a fax laying out deal terms. When he returned to his hotel around midnight, he didn't find any fax, so the deal went nowhere.
Mr. Klein had left a message on Mr. Buffett's cellphone. But Mr. Buffett says he doesn't use cellphones much, so he didn't even realize the message was there. He says he didn't get it until 10 months later, when his daughter, Susan Buffett, discovered it. He declines to discuss what Mr. Klein's message was, other than to say that receiving it that night wouldn't have led to a deal.
Messrs. Diamond and Klein didn't respond to requests for comment.
That same weekend, another AIG deal was in the works. Berkshire executive Ajit Jain, who runs its massive reinsurance unit, held discussions with an investment group led by Mr. Flowers and Kohlberg Kravis Roberts & Co., the New York private-equity giant. They were trying to line up a deal to provide reinsurance for some AIG operations, which would have eased some of the company's capital constraints.
Back in Omaha on Sunday, Mr. Buffett thought a deal was likely and left for a dinner at the Happy Hollow Club, a local country club, with Google Inc. co-founder Sergey Brin and Mr. Brin's wife. He expected to review the terms afterwards. But the deal fell through because AIG's financial troubles proved too severe and complex. Later that week, the U.S. government announced an $85 billion bailout. By this point, Mr. Buffett was beginning to worry about the entire financial system. In phone conversations, the normally loquacious Mr. Buffett was less talkative and sounded nervous, according to one person who was speaking with him regularly at the time.
Shares of giant investment banks Morgan Stanley and Goldman Sachs were spiraling lower amid worries that they would be the next firms to fail. The commercial-paper market, which helps finance the day-to-day operations of businesses around the country, was seizing up. On Sept. 16, the Reserve Primary Fund, a big money-market fund, revealed huge losses, due in part to holdings of Lehman's commercial paper.
If the commercial-paper market had frozen completely, more major financial institutions and possibly even household names such as GE would have failed, Mr. Buffett says, 'because their checks would have failed to clear.' That would have triggered panic in the nation's money-market funds, which held about $3.5 trillion in assets, because some of them held commercial paper. The resulting chaos, Mr. Buffett concluded, could have crashed global financial markets, threatening Berkshire.
'I felt that this is something like I've never seen before, and the American public and Congress don't fully understand the gravity' of the problems, he recalls. 'I thought, we are really looking into the abyss.'
At a birthday party for a wealthy friend in Omaha, several guests asked Mr. Buffett if their money-market funds were safe. He found the questions worrisome: They suggested widespread fears about the safety of funds long perceived to be invulnerable to losses.
'When people who drive Rolls-Royces are worrying about their piggy banks, you know you've got a problem,' he says.
On the morning of Sept. 19, Morgan Stanley Chief Executive John Mack phoned Mr. Buffett in hopes of arranging a deal, possibly a large credit line Morgan could tap. Exact terms weren't discussed. Mr. Buffett told Mr. Mack he wasn't interested because he wasn't familiar enough with the bank.
Mr. Buffett says he still felt the government had the tools to head off calamity. He stayed in close touch with government officials, fielding phone calls from then-Treasury Secretary Henry Paulson, who was cobbling together a bank-bailout package and was interested in Mr. Buffett's thoughts about structuring it. Senators seeking guidance about the package also phoned him.
As the government swung into action, Mr. Buffett recalls, he gained confidence that the crisis would be resolved. A government guarantee of assets in money-market funds, which came days after the Reserve fund's troubles emerged, was a big step forward, he says.
In late September, Mr. Buffett decided to strike.
Goldman Sachs, like Morgan Stanley, was in need of cash. The bank already had made several pitches to him. None had enticed him. But he remained open to offers, partly because he was familiar with Goldman's operations, having worked with the bank for many years on various deals.
On Sept. 23, Goldman banker Byron Trott, who had long worked closely with Mr. Buffett, called to ask what it would take to do a deal.
Mr. Buffett laid out his terms. Hours later a deal was struck. Berkshire purchased $5 billion of Goldman preferred shares with a 10% annual dividend, as well as warrants to buy $5 billion worth of Goldman shares for $115 apiece. The shares now trade at about $166.
The deal, Mr. Buffett says, was based partly on his faith that the government would stave off the kind of financial catastrophe that could have endangered even Goldman. Another factor: attractive terms for Berkshire.
Not long after that deal, Mr. Buffett agreed to buy $3 billion of General Electric preferred shares with a 10% annual dividend. He also got the right to buy $3 billion of common stock at $22.25. GE's shares rose 31 cents Friday to $15.92 on the New York Stock Exchange.
Having put $8 billion into those deals, Mr. Buffett went on a public-relations offensive, in what appeared to be an effort to bolster markets and urge the government to take strong action.
On public television's 'The Charlie Rose Show,' he called the market turmoil an 'economic Pearl Harbor' and reiterated his faith in the nation's long-term strength. In a New York Times opinion piece, he wrote that he was buying U.S. stocks in his personal account.
On Oct. 6, he sent a letter to Treasury's Mr. Paulson laying out a plan for relieving the financial system from some of the pressure created by billions of dollars of toxic mortgage assets held by banks. He proposed pooling private assets, including Berkshire's, with Treasury funds to purchase mortgage securities from banks.
Mr. Paulson thought it was 'the seed of a good idea,' says one person familiar with the matter, but the Treasury was scrambling to put out brush fires and didn't have time to pursue it.
Continuing stock-market declines were taking a toll on Berkshire.
In February, the company reported that its book value per share -- a measure of asset values it uses to gauge performance -- had dropped 9.6% in 2008. That was the steepest decline since Mr. Buffett took over Berkshire in 1965. It suffered major losses on its stock holdings, including American Express Co. and Moody's Corp., and a big paper loss on derivative contracts it had written to insure customers against long-term declines in global stock indexes.
The toughest blow came in April, when Moody's stripped Berkshire of its AAA rating, citing the stock-market decline. The move has constrained Berkshire's vast insurance operations from writing some policies against major losses. Berkshire's stock also has suffered, down about 30% since mid-September 2008.
The Burlington railroad deal reduced Berkshire's earnings-growth potential, analysts say, since railroads tend to track overall economic growth. But it also trimmed Berkshire's exposure to risk-prone financial operations, potentially giving it a more solid foundation for when the next crisis hits.
Mr. Buffett has some regrets about his decisions during the financial crisis. He says if he'd waited to deploy his cash until March 2009, when the market hit bottom, he could have made a killing.
'I made plenty of mistakes,' he says. 'I didn't maximize the opportunities offered by the chaos. But in the end, it worked out OK.'
Scott Patterson
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