Back in February we noted a report in the New York Post that "The Treasury Department, which now owns 56 percent of the auto-financing outfit, wants GMAC to push ahead with a ResCap sale -- possibly to billionaire Warren Buffett." Now the Post has an update, reporting that Mr. Buffett and his Berkshire Hathaway have apparently decided to stop pursuing "GMAC's Residential Capital mortgage-lending unit despite expressing interest in buying it as recently as two months ago."
Says the Post: "According to sources familiar with the matter, Buffett is backing off from ResCap in part because he's not interested in engaging in a bidding war for the money-losing business, which government-controlled GMAC recently decided to put on the block after several fits and starts. Among those considering taking a run at ResCap are The Blackstone Group and investment giant BlackRock."
In other words, if Mr. Buffett isn't going to get the thing from the taxpayers for way less than what it is worth, he isn't interested. Nothing wrong with that -- it may be the right move for his shareholders. What is galling, though, is for Mr. Buffett to be going around calling for raising other people's taxes, including the guys at Blackstone he would have been bidding against for ResCap. If Mr. Buffett wants to do his part for the federal fisc, wouldn't be sufficient for him to stop with the tax-increase talk and simply stop offering to buy federal assets for less than they are worth?
Part of the answer is that the value of ResCap may depend in part on who owns it. It may be worth more in the hands of private management motivated by profit than in the hands of government officials who have to balance the profit motive against other federal policy goals, like reducing foreclosures.