Buffett Says He Had 'No Problem' With Goldman Abacus Transaction

Warren Buffett, the chairman of Berkshire Hathaway Inc. (BRKA, BRKB), said he has "no problem" with Goldman Sachs Group Inc.'s (GS) mortgage transaction that prompted a lawsuit from the U.S. Securities and Exchange Commission.

"I see nothing in Goldman's behavior that makes it any more subject to criticism than Wall Street generally," Buffett said at a press conference in Omaha, Neb., Sunday. Buffett said he tried to explain to shareholders at Berkshire's annual meeting Saturday what he'd read in the SEC complaint and why it didn't bother him.

"If there were other things that were hugely troublesome, I haven't seen them" at Goldman, he said.

Instead, Buffett said, the bond insurer ACA Capital Holdings--named in the SEC complaint as having been misled about Goldman's Abacus transaction--was simply less well-informed or less intelligent than John Paulson & Co., the hedge fund that profited when homeowners referenced in the Abacus security began to default. The SEC complaint alleges that Goldman misled ACA, telling the bond insurer that Paulson would profit if the homeowners made their mortgage payments as scheduled.

It was up to ACA to evaluate the security and determine how much to charge--if they even should insure it at all, Buffett said.

"Any bond insurer that is making a decision on what to insure and how much to charge for it should not care a whit about who is on the other side of the transaction," Buffett said. "There's always someone on the other side of the transaction."

"I just think it's very strange to say at the end of a transaction that if the other guy was smarter than you, that somehow you were defrauded," Buffett said. "That would be an interesting commercial consequence. That seems to be what they were saying."

Goldman has denied wrongdoing in the transaction outlined in the SEC complaint.

Berkshire has sold bond insurance and offered protection on securities much like ACA did, he said. "It's up to me to evaluate" the transaction "We look at the portfolio and try to find the right premium."

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Buffett Says He Had 'No Problem' With Goldman Abacus Transaction

Buffett Says He Had 'No Problem' With Goldman Abacus Transaction

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