Warren Buffet is largely hailed as the world’s most successful investor. He owns Berkshire-Hathaway and has made billions of dollars on the stock market. Buffet practices value investing, which he has characterized as: "finding an outstanding company at a sensible price”. He is even called the Oracle of Omaha (he’s from Nebraska) and invited to speak at universities and conferences around the countries. He’s a businessman. An investor. A successful one who seems to see value.

He also says the bailout was and is a good idea that will pay off in the long run.

But don’t think that means he’s ok with the way Wall Street handled anyone’s money- he said so, according to Reuters, in a recent letter out to BH shareholders that criticized the way Wall Street executives handled money and lost more than $500 billion. 

"A board of directors of a huge financial institution is derelict if it does not insist that its CEO bear full responsibility for risk control. If he's incapable of handling that job, he should look for other employment. If he fails at it -- with the government thereupon required to step in with funds or guarantees -- the financial consequences for him and his board should be severe," said Buffet in the letter.

Yikes.

It’s nice to hear that a billionaire investor extraordinaire is actually calling Wall Street out, though.

"CEOs and, in many cases, directors have long benefited from oversized financial carrots; some meaningful sticks now need to be part of their employment picture as well," wrote Buffet.

What he means is we should stop rewarding executives for taking big risks and getting big buy-ins from investors and start rewarding them for making money, and not rewarding them if they don’t make money.

And that’s wise advice from a financial executive that sounds very similar to the complaints I hear from, well, everyone else I know who is not a financial executive. The idea that you make millions of dollars because you handle millions of dollars doesn’t compute. It doesn’t work that way in any other profession.

If you can take millions and make millions, then sure, take what you want as a cut. I hear that. But if you lose, well, you lose.

In essence it is the gulf between how we view investment banking and what it really is. We view it as a job, as an industry that should be respected. When what it really is is white collar gambling. I have nothing against gambling- you want to play poker, do it. You win a thousand dollars, good for you. You lose your shirt, the government isn’t going to give you a new one. Well, maybe they will.

My point is- investment banking is gambling and, as such, you should be rewarded accordingly if you are gambling. And since it’s with other peoples’ money, those people should demand that you be responsible for your actions. Not the government. That’s right- it’s not really the government’s business- they govern a lot of things, but I’m ok with them not getting involved with the stock market. A bit Republican, but still. Don’t bail anyone out and see how long those guys that don’t make a profit stay in business. See how long it is before they reform into banks that invest in ways that profit for their shareholders- like. Every. Other. Business.

Photo Credit: bunnicula (via Flickr under CCL)