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Seeking Shelter, Warren Buffett Limits Receivables From Major Banks


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From a Forbes article below:


"Seeking Shelter, Warren Buffett Limits Receivables From Major Banks"



“Someday,” he tells Forbes, “it won’t matter how large the level of assets on J.P. Morgan’s balance sheet. There is no risk control system that is effective if the numbers get big enough. I don’t believe the reserves they set up against loss in their derivatives. All that netting stuff doesn’t mean anything. I don’t want to be intertwined with any bank as to significant amounts of receivables. I can’t get that intertwined.”


I'd definitely like to see this interview if there is video or a transcript.

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So, today Buffett flatly tells Forbes he refuses to write any long term derivatives contracts with anyone,  recalling the trouble the nation of Kuwait faced many years ago when it could not collect on its derivatives contracts. Nor will he take positions in short term commercial paper for even a few weeks, as he wants to avoid getting stuck in a crisis where he won’t be able to collect the expected receivables from a counter-party.


Thanks for posting.

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