Buffett’s Berkshire Avoids Potential Hit From Derivatives Collateral

After much lobbying Berkshire Hathaway (BRK-a) (BRK-b) has finally succeeded in its effort to influence derivatives legislation.

CNBC is reporting that Warren Buffett’s conglomerate, along with other co.’s in similar circumstances, won’t have to put aside large sums of money to cover potential losses for existing derivatives contracts.

According to a letter written by Senate Banking Chairman Chris Dodd (D., Conn.) and Senate Agriculture Chairwoman Blanche Lincoln (D., Ark.), two key FinReg lawmakers on Capitol Hill, the version of the bill now moving forward in Washington “provides legal certainty to those contracts currently in existence, providing that no contract could be terminated, renegotiated, modified, amended, or supplemented.”

Dodd and Lincoln also write, “It is imperative that we provide certainty to those existing contracts for the sake of our economy and financial system.”

Needless to say, the change Mr. Buffett has sought is particularly beneficial to Berkshire, which has a $63 billion derivatives portfolio, according to Barclays Capital.

Mr. Buffett has been a vocal critic of derivatives, famously branding them in Berkshire’s 2002 annual report “financial weapons of mass destruction.”

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