Buffett Scores Billions on Bank of America Investment
Broadly speaking, Warren Buffett — a self-made billionaire and the mad genius behind Berkshire Hathaway (NYSE:BRKA)(NYSE:BRKB) — has been bullish on the financial sector over the past few years. Perhaps the most visible testament to this position was his $5 billion investment in Bank of America (NYSE:BAC) in 2011, a deal that helped shore up the bank’s balance sheet, speculated to be in a state of disrepair at the time.
Bank of America, like so many other financial institutions, was dragged through the dirt during the financial crisis and continued to suffer in its wake. Increased regulatory pressure and a tidal wave of litigation compounded losses from mortgage liabilities that continued to bleed money.
Bank of America and other financial institutions like Goldman Sachs (NYSE:GS) and even General Electric Capital (NYSE:GE) lost tens of billions of dollars because of the crisis. Buffett, perhaps channeling the ghost of J. P. Morgan (the man), stepped in, offering a a lifeline worth about $24 billion spread throughout the financial industry, establishing what has been one of the boldest and most successful bets on the U.S. financial sector.