By Jamie McGee
Jan. 21 (Bloomberg) — President Barack Obama’s proposals to regulate banks should include a requirement that chief executive officers and their spouses forfeit their assets when companies fail, billionaire Warren Buffett said on the Fox Business Network today.
“There ought to be a huge downside,” said Buffett, whose Berkshire Hathaway Inc. is the largest shareholder in Wells Fargo & Co. “Make it so that the CEO of an institution that fails, or goes to the government and needs help, really gets destroyed himself financially. Why should he come out any better than somebody that gets laid off as an auto worker at General Motors?”
Buffett, who collects a $100,000 salary as Omaha, Nebraska- based Berkshire’s leader, said CEOs should act as “chief risk officer.” He has criticized bankers for failing to realize that housing prices could fall.
Obama today introduced a plan that he said would reduce risk-taking by financial institutions. The proposal is part of an effort to overhaul financial regulations and would specifically prohibit banks from running proprietary trading operations or investing in hedge funds and private equity funds. Banks conduct proprietary trading for their own benefit, not for that of their clients.
Buffett said he hadn’t had an opportunity to review the administration’s proposal. He supported Obama’s campaign for president.
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