- Warren Buffett phoned Treasury Secretary Hank Paulson at the height of the 2008 financial crisis with a suggestion that likely saved the US economy from an even deeper recession.
- The famed investor and Berkshire Hathaway CEO proposed the government plow capital directly into banks instead of only buying their distressed assets.
- Paulson quickly gathered the bosses of the nation’s biggest banks and convinced them to accept billions of dollars in investment.
- The Treasury demanded preferred stock paying chunky dividends, as well as stock warrants in return, emulating Buffett’s bailout of Goldman Sachs in September 2008.
- Former President George W. Bush called it “probably the greatest financial bailout ever” and said it “probably saved a depression.”
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Warren Buffett made a late-night call on Saturday, 11 October 2008 that likely spared the US from an even more devastating financial crisis.
The billionaire investor and Berkshire Hathaway CEO dialed then-Treasury Secretary Hank Paulson, the pair said in “Panic: The Untold Story of the 2008 Financial Crisis,” a documentary released in 2018.
“Hank, this is Warren,” Buffett said. A tired and groggy Paulson’s first thought was, “My mom has a handyman named Warren, why is he calling me?”
Buffett was calling about the Troubled Asset Relief Program (TARP), which authorized the Treasury to spend $700 billion purchasing distressed assets from banks. Lawmakers passed it in a desperate effort to shore up the financial system after the collapse of Wachovia and Washington Mutual — two of the greatest bank failures in American history.
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