Buffett's New Bank

Warren Buffett,the Omaha billionaire,has added Goldman Sachs(GS) to his Berkshire Hathaway(BRKa)holdings.Calling Goldman an exceptional institution,Mr.Buffett will acquire five billion of perpetual preferred shares,yielding 10%,plus warrants for another five billion of common shares of Goldman,which recently became a commercial bank.Goldman CEO Lloyd Blankfein says they have a great relationship with Mr.Buffett.His investment is a strong validation of Goldman's future prospects,Mr.Blankfein asserted.Goldman went to the Federal Reserve with its request to become a commercial bank the weekend of September 19-21.On September 21,the central bank approved the request,waiving the normal 30-day waiting period.Now Goldman can access the Federal Reserve's Discount Window for loans,but will also be tightly regulated.Mr.Buffett revealed that if he hadn't thought the government would act on a rescue plan,he wouldn't have made the investment.He is thankful to Treasury Secretary Hank Paulson for having the imagination to step up with a plan.The government stands to make a profit from buying distresed assets,in Mr.Buffett's opinion.We were facing an economic Pearl Harbor,the revered investor reflected,referring to the Japanese attack on Hawaii in 1941 that drew the U.S. into World War II.