US taxpayers did well when Goldman Sachs repaid US Treasury's TARP loan of $10 billion. According to Bloomberg, they made a return of 23% which is not too bad at all in any market, let alone this one.
But that's just lunch money compared to Warren Buffett's return. As the New York Times reports,Buffett's stake in Goldman is now worth $9.1 billion, or about $4.1 billion more than what he paid 10 months ago. That's more than 120%.
Goldman Sachs had turned to Buffett for a lifeline during the height of the financial crisis and Buffett had obliged after negotiating the best possible terms for his support. As finance professor Gerald Martin said, it must feel good to be Warren Buffett. "That number just flies in the face of people who like to say he's lost a step."
US taxpayers did well, Buffett even better and everyone's happy. But is that an illusion?
As David Weidner writes in MarketWatch, the banking business stinks because of all the bad loans and investment banking isn't doing much better. Goldman's results come from bigger risks and the concern is whether other banks will follow suit because of the allure of billions. Unless that problem is addressed, we could well have another crisis.
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