Warren Buffett rides to Goldman Sachs' rescue

September 23, 2008 | By Jim Kim

Calling Goldman Sachs an "exceptional institution," Warren Buffett announced he had bought $5 billion in Goldman preferred shares (which pay a whopping 10 percent) and warrants to buy potentially another $5 billion in common shares (at $115 each over the next five years). Goldman said it will also raise $2.5 billion in a common offering. This sends a message that Goldman and Morgan (fresh from its deal with Mitsubishi UFJ) are more than viable as commercial banks. Of course, not everyone is going to get the deal Buffett got, but at this point, a surge in the price of Goldman and Morgan would be good news. Everyone expected big capital raises from both banks after they went commercial.

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