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Connecticut Attorney General Richard Blumenthal is looking to see whether the parent company has influenced Moody's debt rating on Buffett's bond insurer business. The debt ratings of bond insurers are used by public entities that purchase their insurance to get favorable rates on borrowed money. With encouragement from the government, Buffett began his bond insurer business in December 2007 as notable bond insurers MBIA Inc. and Ambac Financial Group Inc. were in jeopardy of losing their "AAA" rating. Berkshire's Class A stock dropped $350, or .26%, to $133,500 in midday Thursday trading on news of the probe. - Gerald Magpily See Bloomberg article Categories Deal Video
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While Berkshire Hathaway Assurance Corp. was originally intended to be an answer to fill a potential growing hole in the bond system, it may turn out to be more of a big problem for Warren Buffett. Bloomberg reports Thursday that Berkshire is under investigation by the Connecticut attorney general for possible conflicts between its almost 20% stake in credit ratings agency Moody's Corp. and Berkshire Hathaway Assurance, the newly formed municipal bond insurance business.
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