In a validation of his astute investment skills, legendary investor Warren Buffett has said that he was approached twice to help American International Group Inc in the final days before the US government rescued the insurer last September. However, his disclosure may add to the torrent of criticism that the government has been facing towards the bailout.
Buffett fielded a phone call from AIG's then-CEO Robert Willumstad on a Friday night in September, and opted not to bid on part of the insurer's US property-casualty operation, the Berkshire Hathaway Inc. chairman said in a Bloomberg Television interview. That Sunday, a second offer to participate in a transaction fell apart when a cash injection by a private group didn't materialise, he said.
''It wasn't very tough,'' to resist an investment, Buffett said. ''They needed more than we could supply by far. I didn't know the extent of it, but I knew that.''
Buffett said he spent ''an hour or two'' on the Friday night examining documents faxed over by New York-based AIG before deciding not to commit Berkshire funds to buy some of the insurer's US operations.
In typical Buffet-speak, the investor explained the situation in his own inimitable way: ''It's like taking out a girl - sometimes you know it isn't going to happen.''
''The time pressures, the degree of uncertainty, the depth of the possible hole, the need to get it through a regulatory body,'' he said. ''It wasn't going to happen.''
The second proposed deal involved ''an insurance transaction that might have occurred in conjunction with a big injection of funds by some group - I don't even know who was necessarily in it - on Sunday night,'' Buffett said. ''That never went anyplace.''
The Federal Reserve first bailed out AIG with an $85-billion credit line shortly after investment bank Lehman Brothers was allowed to fail and brokerage Merrill Lynch sold itself to Bank of America Corp. (See: $85-billion bailout for AIG)
Regulators have since revised AIG's bailout three times to ease the original loan terms and increase the bailout package to about $160 billion. AIG last week posted a $61.7 billion fourth- quarter loss, the worst in US corporate history. (See: Fed pumps another $37.8 billion in AIG / US government injects additional $30 billion in AIG / AIG may report largest ever quarterly loss in corporate history)