The following is the opening statement of Warren E. Buffett, chairman of Salomon Inc, before the Subcommittee on Telecommunications and Finance of the Energy and Commerce Committee of the U.S. House of Representatives.
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When Your Reputation is On the Line | Warren Buffett
US House of Representatives. September 4, 1991.
One of the most serious controversies involving Warren Buffett occurred in 1990. Berkshire Hathaway had acquired a 12% interest in the investment bank Salomon Brothers in 1987, and news came out in 1990 that a rogue trader had submitted bids in excess of Treasury rules and that the CEO at the time (John Gutfreund) had failed to discipline the trader.
The U.S. government threatened to come down hard on Salomon, and Buffett stepped into the breach. He directly intervened with the Treasury department to quickly reverse a ban on Salomon bidding in government bond auctions, a move that would have crippled the investment bank.
He also stepped in to run the bank for a time, and despite a $290 million fine levied on Salomon, Berkshire Hathaway ultimately saw its stake more than double when Travelers bought Salomon in 1997.
Sources:
1) http://blogs.wsj.com/marketbeat/2010/...
2) http://www.businessinsider.com/salomo...
3) http://www.investopedia.com/financial...
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