Buffett’s Crisis-Time Bets Show That Sometimes Greed Pays Off

Plant Money

Source: http://www.flickr.com/photos/76657755@N04/

It’s starting to look like the late-2000s crisis was bad for everyone except Berkshire Hathaway (NYSE:BRKA)(NYSE:BRKB), led by Chairman and CEO Warren Buffett. During a period in which trillions of dollars of household and corporate wealth evaporated into a nebulous cloud of financial fairy dust and credit pipelines froze, Berkshire opened its wallet and lent tens of billions of dollars.

The advantage of lending when nobody else wants to is that you can charge pretty much whatever you want, and Buffett took full advantage of the situation to make sure he would get a healthy return on his investment. Buffett, perhaps channeling the ghost of J.P. Morgan (the man), put up about $26 billion during the crisis, lending cash to everybody from Bank of America (NYSE:BAC) to Mars Inc.

Fast forward to 2013, and Berkshire has pocketed a cool $10 billion in profit from the loans so far.