Before the housing bubble was even on the horizon, Warren Buffet became the largest shareholder in Moody’s. Moody’s is one of only a few credit rating agencies that play a pivotal role in the buying and selling of bonds.

Here’s how it works: before a company can raise money through issuing a bond, that bond needs a rating. Companies pay Moody’s to rate their bonds– and for a bond to be sold to a pension fund, it needs to have the highest rating.

During the housing bubble a couple of the boy’s at Moody’s went soft and got worried that maybe they were being overly generous with their ratings…so they actually emailed Warren to let him know there may be problems, but really, why would Warren Buffet pay attention to those kinds of details? He was getting his money.

So after the melt down, one report had it that 9 out of 10 mortgage bonds rated by Moody’s were way too high. and a lot of people lost their homes. Pension funds took a big hit and the taxpayers had to pay trillions of dollars to clean up the mess.

Some congressional commission asked Warren to come in and speak on the matter and explain how Moody’s could make so much money for him while getting the ratings so wrong and crashing the economy in the process. He told them “no”. The only way they were going to get warren to speak about this was under a subpoena and so they subpoenaed Warren Buffett.

But is didn’t really work out so well for them because Warren couldn’t really remember too many details. At one point he claimed he didn’t know what state Moody’s was even in–
that’s right brother– deny deny deny!

At the end of his testimony he finally opened up with, “if an investment pays me $500,000,000 annually in dividends alone that is $15 a second. tick tick tick, i don’t want those ticks to go away.”

Thus speaketh the Oracle of Omaha!