On Moral Hazard...............

Mr. Bondi:  "Would the American economy have been better off in the long run if there had been no exceptional government assistance to financial institutions?  In other words, do you think we've increased the likelihood of moral hazard in the long run?"

Mr. Buffett:  "No, I think the moral hazard has been misunderstood in a big way.  There is no moral hazard existing with shareholders of Citigroup, with Freddie Mac, with Fannie Mae, with WaMu, with Wachovia - you just go up and down the line.  I mean these people lost anywhere from 90 percent to 100 percent of their money, and the idea that they will walk away and think, 'Ah, I've been saved by the federal government.'
      I think just the companies that I've named there's at least a half a trillion dollars of losses to common shareholders.
      Now, there's another question with management, which we might get into later, but in terms of moral hazard, I don't even understand why people talk about that in terms of equity holders."

Mr. Bondi:  "Uh-huh.  Do you think we would have been better off, though, if we had not had the infusion of government assistance?"

Mr. Buffett:  "I think it would be a disaster.  No, it would have been the disaster of all time."

-Questions and answers at the Financial Crisis Inquiry Commission