When Salomon Brothers was embroiled in a
bond-rigging scandal in 1991, Buffett, its largest in-
vestor, took the helm as chairman and chief execu-
tive officer of the embattled company. The govern-
ment intended to withdraw the bank’s trading
privileges, a move that would bankrupt the com-
pany. However, Buffett was able to intervene by
meeting with Alan Greenspan, chairman of the
Board of Governors of the Federal Reserve system,
and eventually the Federal Reserve lifted the ban,
thus saving the company.
Buffett continued investing in prominent compa-
nies, including weapons manufacturer General
Dynamics and financial services firms Wells Fargo
and Federal Home Loan Mortgage Corporation
(Freddie Mac). He started purchasing companies
outright, including several insurance firms, such as
Geico and General Reinsurance. The acquisitions
essentially transformed Berkshire Hathaway (Buf-
fett’s main investment vehicle, which he took over in
1965) primarily into an insurance company. By the
end of the decade, insurance accounted for more
than 70 percent of Berkshire’s revenues. Buffett’s at-
traction to the insurance industry was fairly logical.
Since policyholders pay their premiums up front,
their cash can be used for investment purposes be-
fore the claims are paid.
Toward the end of the decade, Buffett was one of
the few voices in the financial community who spoke
out against the dot-com explosion. Initially, Buffett’s
methods of investing and strategizing came under
increasing criticism, and 1999 saw Buffett’s first neg-
ative year in a decade, with Berkshire’s per-share
book value underperforming the S&P 500 index for126 Buffett, Warren The Nineties in America
Warren Buffett.(AP/Wide World Photos)