Warren Buffet carefully cultivates a CEO-savant persona.
Most media enable him.
His latest stunt, ostensibly meant to save Bank of
America while closing a savvy deal for Berkshire Hathaway, garnered laudatory
headlines. Bank of America spun Buffett's $5 billion investment for maximum
Buffett supposedly came up with the idea in the bath.
added to his repertoire of folkways by
Unfortunately, Bank of America is going to need more the
$5 billion and temporary use of Warren Buffett's aura to solve their problems.
The Wall Street Journal, September 2, 2011:
U.S. regulators have pushed Bank of America Corp. to show what measures it
could take if conditions worsen for the Charlotte, N.C., lender, according to
people familiar with the situation.
Executives of the bank recently responded to the unusual
request from the Federal Reserve with a list of options that includes the
issuance of a separate class of shares tied to the performance of its Merrill
Lynch securities unit, these people said. Bank of America purchased Merrill
Lynch in 2009, and it has become the bank's most profitable division.
It's easy to forget that Buffett is the CEO and
Chairman of a publicly held company when he's seen scurrying around like
Mighty Mouse, nibbling at failing banks and pulling billions from his fanny
pack. Berkshire is a big company with some shareholders that aren't him, his
family, or his ego-stroking
entourage otherwise known as the Board of Directors.
of America move is not the kind you see most fiduciaries, bound by duty and
good faith, make. It's a public relations coup as performance, designed to
leave a refreshing aftertaste.
Instead, investors are often stuck with a bitter one.
The next time something goes terribly wrong at a
Berkshire Hathaway company, there's a strong possibility no one will hear about
it. Warren Buffett and Charlie Munger won't be held directly responsible
either. That's the beauty of Buffett's version of a conglomerate corporate
structure, decentralized to such an obscene level such that its minimalism is
brandished as a feature not a bug.
Read this article in its entirety at the re: The Auditors, a blog
by Francine McKenna.
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