Buffett Lambastes Bankers, Insurers for 'Stupidity' (Update3)

By Erik Holm and Andrew Frye
Bloomberg News
May 4, 2009

May 4 (Bloomberg) -- Berkshire Hathaway Inc. Chairman Warren Buffett lambasted bankers, insurers and regulators for being blind to the possibility home prices could fall, and said their shortcomings caused the worst recession in half a century.

Buffett and Vice Chairman Charles Munger said Wall Street sold subprime mortgage "sewage," blamed the media and regulators for missing the danger and said the government stress tests of financial firms won't advance Berkshire's understanding of the stocks the company owns. Buffett hosted a record 35,000 people at the Omaha, Nebraska-based firm's annual meeting May 2 and spoke at a news conference yesterday.

"I think that virtually everybody associated with the financial world contributed to it," Buffett said of the crisis. "Some of it stemmed from greed, some from stupidity, some from people saying the other guy was doing it."

Home foreclosures have advanced to a record, U.S. unemployment rose to its highest in 25 years and Berkshire shares plunged about 30 percent since shareholders gathered at Omaha's Qwest Center arena last year. The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion

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