Charlie Munger, Berkshrie Hathaway vice chairman, says he would like to see a stronger Volcker rule. Meanwhile Warren Buffett says that although he doesn’t share the same view as strongly, banks should not have a “free hand.”
we are spending the morning with warren buffett and this weekend, i got the chance to sit down with his right hand man, charlie monger, and we spoke with what’s been happening on wall street whether the rules there need to be tightened up. warren, take a listen to this. we had michael lewis on the show this week and he said that the volcker rule is not enough, it needs to have way more teeth, there need to be stricter things. i totally agree. if i were making the rule, i would make michael lewis look like a piker. i thought you might say something like that. if you were a benevolent dictator and this was yours to lay out, how would you lay it out. take the rapid training by the computer geniuses. those people have all the social utility of a bunch of rats admitted to a grainry. i never would have allowed the rats to get in the grainerry. i don’t want the brilliant young men of america being rats in somebody else’s grainery. that’s not the right way to run the republican and if you would let me write the law, that wouldn’t happen. but of course nobody is going to let me do that. you know that he would like to see more restrictions on do that. that’s charlie’s thoughts. you know he’d like to see more restrictions on wall street. what do you think about that? wishy washy. pretty strong. s. charlie’s pretty old testament. i don’t believe quite as strong as he do. we would have both thought that the repeal was a mistake. banking is a big business. it’s a profitable business and there’s plenty of money that can be made with banking. banks in this country in effect can issue a government guaranteed piece of paper. and once you have the right to your government guaranteed piece of paper, your customer doesn’t care whether you’re doing dumb things or not. so the market does not impose a discipline on you because they’re worried whether they’re going to get the money back. they’re going to get the money back because of the fdic. the undisciplined way to raise huge amounts relative to capital is potentially dangerous. and we’ve seen that in the past. so you do not want banks to have a free hand in doing lots of things where there’s great interconnectedness and where dominos can get lined up. that’s what we had a few years ago up. said you opposed the repeal of glass-steagall but can you put the genie back in the bottle? no. and then you get the whole argument about the international system and then you say do you want a banking system in the united states that has its hands tied behind its back with european entities. i can see that argument. but the end the government has to decide what banks can do and where they start doing it and where the limits things they can do without getting into an area where they start causing dominos to topple.
