"Regulators are starting to scrutinize Warren Buffett's Berkshire Hathaway to determine whether it is important enough to the financial system to require Federal Reserve supervision," Bloomberg News reports.
This is a classic. Say what you will about Warren Buffett — and we've been critical of him here at times in connection with his calls for tax increases and on various other issues — he's got a pretty good track record over a pretty long period of managing risk. The Federal Reserve and the federal government, for that matter, not so much, whether it was the housing bubble or whether it is the risk posed to the federal government by the future liabilities of Medicare and Social Security.
Who is being protected here? Berkshire shareholders? If they wanted government-approved risk levels they'd invest in Treasury bills rather than Berkshire Hathaway shares. The rest of the economy? If the Fed detects a position of Berkshire that poses an unacceptable risk, what are they going to do, order him to unwind it? What if he refuses? The whole thing doesn't make much sense.