From Warren
Buffett’s 2010 FCIC testimony, when asked why he sold his shares in Freddie
Mac and Fannie Mae in the year 2000:
I was concerned about the management at both Freddie Mac and Fannie Mae although our holdings were concentrated in Freddie Mac. They were trying to and proclaiming that they could increase earnings per share in some low double digit range or something of the sort. And any time a large financial institution starts promising regular earnings increases you’re going to have trouble. It isn’t given to man to be able to run a financial institution where different interest rates scenarios will prevail and all of that comes to produce smooth regular earnings from a very large base to start with. So if people are thinking that way they’re going to do things maybe in accounting it’s turned out to be the case in both Freddie and Fannie but also in operations that I would regard as unsound. I don’t know when it’ll happen, I don’t even know for sure if it’ll happen. It will happen eventually if they keep up that policy and so, we, or I just decided to get out.