Buffett says JPMorgan Chase doing the right things

[July 14, 2012]  OMAHA, Neb. (AP) -- Billionaire investor Warren Buffett said Friday he believes JPMorgan Chase is doing the right things to deal with its multibillion-dollar trading losses.

The chairman and CEO of Berkshire Hathaway Inc. addressed a variety of topics during Friday's interview on Bloomberg television, including health care reform and Europe's woes.

But banks were prominent because Berkshire has major investments in Wells Fargo and Bank of America, and Buffett was interviewed while JPMorgan CEO Jamie Dimon was discussing his bank's results with investors.

JPMorgan said a trading blunder had cost the bank $5.8 billion so far this year, which is almost triple its original estimate.

"It sounds like a whole lot of money -- it is a whole lot of money -- but it's not that significant related to JPMorgan," said Buffett, who owns 1 million JPMorgan shares in his personal portfolio.

Buffett said it's normal for banks to have losses because they are taking some risks. He said the trick is to make sure potential losses don't get so big that the bank doesn't have the assets to cover them.

Buffett said he has faith in Dimon's leadership, but acknowledged that he may be more forgiving than some people because of the mistakes he's made in his own career.

"I have no question about Jamie Dimon telling the truth," Buffett said.

Berkshire Hathaway has big investments in Wells Fargo & Co. and Bank of America Corp. The Omaha-based company also owns roughly 80 subsidiaries, including railroad, clothing, furniture and jewelry firms.

Buffett said he's comfortable with the size of U.S banks and doesn't think they are too big.

Buffett is in Sun Valley, Idaho, this week attending the annual conference hosted by investment banker Allen & Co. that attracts Wall Street and media moguls.

Buffett said he doesn't think the euro can survive in its current form unless all 17 European countries involved can agree on monetary policies. He said the system Europe set up had a fundamental flaw that must be fixed.

"The question is, can 17 countries get together in a way to do something that will require much closer cooperation when their individual conditions are so different?" Buffett said.

He said business has slowed considerably in Europe over the past few months as those countries struggle to deal with their debt problems.

The overall economy has also slowed in the United States, Buffett said, even though residential housing construction is beginning to pick up.

Buffett said health care costs remain a major concern for U.S. businesses because their competitors elsewhere don't pay as much for health insurance.

"It's the tape worm, essentially, of the American economy," he said.

President Barack Obama's health care reforms that the Supreme Court approved are a step in the right direction, but more needs to be done to reduce costs, Buffett said.

He reiterated his support for Obama Friday. But he says this year's presidential election will be a close race.

Buffett says the unemployment rate will be an important factor in the presidential race, but it won't determine the race by itself.

Buffett also said in the interview:

• One of Berkshire's new investment managers had bought stock in Phillips 66, the refining business spun off from ConocoPhillips. That comment send Phillips 66 stock soaring nearly 6 percent.

• Berkshire will probably buy more small and medium-sized newspapers this year, but it all depends upon who calls him. Buffett said he favors buying whole newspapers instead of investing in media companies as long as the price is right. "The prices should be low because their revenues are going to decline over time. We are not buying into a business where revenues are going to increase. We have to buy them at the right price."

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Online:

Berkshire Hathaway Inc.:
http://www.berkshirehathaway.com/

[Associated Press; By JOSH FUNK]

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