Buffett bails out Goldman

Mr Buffett’s downside is protected. His $5bn of perpetual preferred stock is essentially permanent capital, but with a cushion of Goldman’s $50bn of shareholders’ equity beneath it. It carries as sweet 10% yield. It is basically a very big insurance premium against another vicious leg-down in capital markets. Throw in Mr Buffett’s warrants to buy $5bn in Goldman’s common stock at a price that is already well in the money, and he looks to have played a blinder.