Warren Buffett, whose Berkshire Hathaway Inc. invested $5 billion in Bank of America Corp., said that problems at the biggest U.S. lender by assets will take “much longer” to clean up.
“The bank has a wonderful underlying business -- it’s got lots of problems,” Buffett, 81, told Bloomberg Television’s Betty Liu on “In the Loop” today in an interview from the floor of the New York Stock Exchange.
“The bet is, is Brian going to get rid of those problems?” Buffett said, referring to Bank of America Chief Executive Officer Brian T. Moynihan, 51. “It won’t take six months or a year; it will take much longer than that even. But the underlying business is doing fine.”
Buffett’s investment in Bank of America, which has lost more than half its market value this year as mortgage-related costs climb, pays $300 million annually in preferred stock dividends and gave Berkshire warrants to purchase 700,000 shares of common stock for $7.14 each. The deal was announced on Aug. 25, two weeks after Moynihan said his firm had enough capital.
Moynihan, who has been in charge of the Charlotte, North Carolina-based bank since the start of 2010, should be given time to turn the firm around, Buffett said.
“I don’t want him to step down,” Buffett said. “Brian, stay at work.”
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