Warren Buffett Losing His Halo on Wall Street

Warren Buffett, one of the richest men in America, is a long-time proponent of higher taxes and greater regulation on business. But his words are usually not matched by his own actions, leading to a major image problem on Wall Street, reports the Wall Street Journal.

“Wall Street’s relationship with Warren Buffett has turned openly testy,” reports Anupreeta Das for the paper, “rekindling a long-held complaint about the chairman of Berkshire Hathaway Inc.: He gets to play by his own set of rules….There is even an adage in the investing community: ‘Do as Warren Buffett does, not as he says.’”

Buffett has worked hard to create the image of a folksy, kind, liberal businessman. He maintains a relatively modest home in Omaha, Nebraska. He is a big supporter of President Barack Obama, and has aggressively advocated for raising taxes on the wealthy, including the inheritance tax.

But as Anupreeta Das points out, “Berkshire Hathaway has been a savvy navigator of corporate tax rules.” By the end of 2014, the company had taken steps to defer a whopping $61.9 billion in corporate taxes by taking advantage of credits and other incentives.

In 2013, Berkshire joined with a Brazilian buyout firm 3G Capital on several deals, including H.J. Heinz and Company (the maker of ketchup among other products) and its merger with Kraft Foods. As part of the merger 6,500 jobs were cut.

As I recounted in my book Throw Them All Out, Buffett has benefited from his cozy relationship with the Obama Administration and members of congress.  The companies that Buffett owns through Berkshire Hathaway received $95 billion from the Troubled Assett Relief Program (TARP). As the Houston Chronicle put it, Buffett was “one of the top beneficiaries of the banking bailout.”

He also leveraged a 2008 investment in Goldman Sachs at the time that Goldman was looking for a federal bailout. Then, astonishingly, Buffett complained in his annual letter to Berkshire investors that the government bailouts were putting him at a disadvantage. As Rolfe Winkler of Reuters put it, “it takes chutzpah to lobby for bailouts, make trades seeking to profit from them, and then complain that those doing so put you at a disadvantage.”

One financial observer, Graham Summers of Phoenix Capital Research, claimed that what Buffett did was “a serious conflict of interest AND seriously bordering on insider trading.”

Buffett, long a celebrity icon in both the financial world and popular culture, has a yawning gap between what he says he beliefs and what he actually does. Word has spread on Wall Street. Will the larger media and popular culture pay attention?