Warren Buffett says the fight over the debt ceiling is “damn stupid.”
If Republicans and President Barack Obama fail to come to an agreement to increase the country’s borrowing authority, it would be “pretty stupid,” billionaire Warren Buffett said in a taped interview that aired on CNBC Friday.
In addition to the upcoming deadline for the debt ceiling in October or early November, the prospect of a government shutdown next month is looming.
But Buffett, while critical of this type of partisan bickering, told Squawk Box, “The market is not going to fall apart because [investors] expect Washington to act irrationally only for a period of time. “
(Continue reading: Buffett: stocks now ‘more or less fairly priced’)
Republicans see the debt ceiling issue and dwindling government funding as leverage to move forward with deficit reduction plans.
The GOP-controlled house is pushing through a bill to bypass federal funding to avoid a shutdown, but includes measures to undermine the president’s health bill.
Obama has vowed to veto such laws.
Buffett said he sees health care costs as “a huge problem for the country … but that’s not Obamacare’s fault” because spending trends have been around for decades.
“Health care costs in this country are a tapeworm to the American economy,” he continued. “Overall, the economy grew 17 percent of GDP for healthcare costs.”
Buffett was interviewed with Bank of America CEO Brian Moynihan on Thursday at a student forum at Georgetown University in Washington, DC.
Regarding health care costs, Moynihan said: “[Obama’s] The Affordable Care Act, the debate surrounding it, has really only focused the economy on how much it really costs them. “
The real economy
Buffett said three-quarters of its business did better under the Berkshire Hathaway umbrella. “Our furniture stores are up 8 or 9 percent … carpet is strong,” he added. “Our railroad carried 207,000 cars last week. That is the highest number of the year. Our high was 216,000 [cars] … before it all fell on its head “during the financial crisis.
Over at BofA, Moynihan told CNBC that American consumers are spending money.
“September so far is about 5 to 6 percent higher than last year,” he continued, but admitted, “People want this to go faster, but it’s just a lot of work, a huge economy like ours take it and completely restore it to where people want it, 3 percent plus growth. “
Moynihan also commented on lawsuits the financial industry is facing as a government lawsuit accusing the BofA statewide unit of fraud in selling billions of dollars in toxic mortgage loans to Fannie Mae and Freddie Mac is on trial earlier this month shall be.
“Going through legal proceedings is enormously expensive, both for us and for the other side, and it usually leads to a rational conclusion,” said Moynihan – adding that it usually happens at the last minute.
The alleged practices the government is suing happened in 2007 and 2008, before BofA bought Countrywide.
“We always make an assessment … what does it cost to defend yourself versus the cost of a settlement, and then what are the implications of that settlement,” said Moynihan. “Unfortunately we had to achieve more in the last few years than we wanted, honestly.”
A little over two years ago, Buffett’s Berkshire acquired a $ 5 billion stake in Bank of America.
Moynihan said Bank of America is in no rush to buy back Buffett’s preferred stock as the BofA has more expensive debt that it plans to withdraw first. Likewise, Buffett said it was highly unlikely that he would exercise his warrants in the bank before 2021.
(Continue reading: Screeching with Big Heads on Wall Street)
–By Becky Quick and Matthew J. Belvedere of CNBC.