Berkshire Joins Goldman Bid for Tax Credits

OMAHA, Neb. (TheStreet) -- Berkshire Hathaway (BRK.A Quote) has teamed up Goldman Sachs (GS Quote) in the bidding to buy tax credits from Fannie Mae (FNM Quote), according to a report Wednesday.

Billionaire investor Warren Buffett's Berkshire Hathaway has joined Goldman Sachs' bid to buy $3 billion in tax credits from government-owned mortgage giant Fannie Mae, The Wall Street Journal reports, according to people familiar with the matter.

On Monday, the Journal said Goldman was in talks to buy millions of dollars of tax credits from Fannie Mae, but the potential deal was running into resistance by the Treasury Department. The money Fannie Mae would earn would be offset by a fall in the government's tax income.

A sale of the tax credits would bring some needed financial relief to the embattled Fannie Mae. However, U.S. officials are concerned about the perception that a sale would help Goldman reduce its tax bill. By joining in the bidding, Berkshire may help deflect some of that criticism as Buffett is respected both in Washington and on Wall Street.

The tax credits are virtually worthless to Fannie Mae as the company takes losses each quarter as the value declines, the report said. Berkshire and Goldman, on the other hand, could use them to offset federal tax expenses.

One investor who has considered a similar transaction told the paper the tax credits promise annualized returns of at least 30%.

-- Written by Robert Holmes in New York.

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