Detox

Try Jim Cramer's Action Alerts PLUS
CLICK HERE NOW

Berkshire's In for a Bruising

04/13/05 - 11:01 AM EDT

Peter Eavis

To be sure, if Buffett does become a target, it won't matter much that -- unlike Greenberg -- he didn't speak under oath. His responses in the Monday interview could in theory be used against him if they are found to contradict other evidence. True, he couldn't be charged with perjury. But the government could still prosecute him if it found he made false statements -- the very charge that landed Martha Stewart in jail. And if Buffett does become a government witness in any trial proceedings, there is actually a slight advantage to have him avoid sworn testimony at this early stage. That's because lawyers for the opposing side can look for small discrepancies in testimony given under oath and use them to discredit the witness.

Other developments show that Buffett is not in the clear.

The AIG-General Re deal is clearly shaping up as Buffett's word against that of Ronald Ferguson, the Gen Re exec who worked with AIG to put the deal together. Buffett says that he didn't know the details of the deal, but the Washington Post, citing an unnamed regulatory source, says that Ferguson has testified that he gave Buffett details of the deal. No outsider to the deal or the investigative process can know who's right.

But it is noteworthy that Buffett reportedly did tell regulators Monday that, in connection with the AIG deal, he and Ferguson did discuss Greenberg's alleged desire to boost reserves. That's important because surely Buffett knows that if an insurance company wants to boost its reserves, it just goes ahead and boosts them. Of course, that usually means a hit to earnings and capital. So eyebrows should be raised as soon as any insurer expresses the desire to boost reserves without taking any real dent in its income statement or balance sheet. Seeing as Buffett knows that, it would seem logical that he then inquired why AIG needed a product that might allow it to avoid the income statement pain that should come with reserve strengthening.

In keeping with TSC's editorial policy, Peter Eavis doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback and invites you to send any to peter.eavis@thestreet.com.

Detox


04/13/05
AIG's Real Mess Is Far From Over

Ousted CEO Greenberg still wields considerable power -- most of it through offshore entities.


04/12/05
Oddly, AIG Looks Right to Buy Here

It seems counterintuitive, but the insurer will survive the writedown and seems past SEC and Spitzer worries.


04/06/05
AIG Cops Turn Attention to Munich Re

Regulators plan to talk to the reinsurer's executives.


04/06/05
Time to Embrace AIG

The insurer now looks more like Tyco than Enron; a Mr. Clean-type outsider could turn this no-so-damaged firm around.


02/16/05
Spitzer Should Look at Fairfax

The attorney general's big probe could stand to include this user of questionable reinsurance.


05/19/08
Cramer on Top Searched Stocks: Yahoo!

Yahoo! is among the most searched stocks on TheStreet.com. Here's what Cramer had to say about the stock recently.


05/17/08
Jim Cramer's Best Blogs

Catch up on his thinking on the hottest topics of the past week.


04/26/08
Coming Week: Make or Break

Investors will have to deal with a Fed meeting and another flood of earnings and economic data.


05/19/08
Top Rocket Stocks: Ensco

Ensco International and Echelon have the potential to move higher in coming days.


04/28/08
Monday's Analysts' Upgrades, Downgrades

See who made what calls.


05/19/08
Telecom Giants See a Savior in Video

The addition of video is helping telecom companies compete against cable and satellite companies.


05/19/08
Contract Expiration Tempers Oil's Rise

The June West Texas Intermediate contract reflects selling pressure ahead of Tuesday's expiration. But stocks in the sector are generally trading higher.


05/19/08
Analysts' Upgrades, Downgrades: Amazon

See who made what calls.


Your Recent Quotes: Quote Up0 | Quote Down0
Dow S&P 500 NASDAQ
Oil*
Gold
10 Yr
0.00%
%
%
%
Data delayed 20 min
Sign up for our FREE newsletters now.

Keep on top of the market and the critical information you need to make more profitable investing decisions.

  • Cramer's Daily Booyah!
  • Before the Bell

Privacy Policy

See All Free Newsletters

Premium Stock Ideas
Access Action Alerts Plus to find out Cramer’s latest picks now!