Credit cards (credit card news) looked like easy money not too long ago. Just look at the rates such cards carry. The notion of easy money was validated when Warren Buffet dreamed of a way to get into the business. Against the advice of executives at Geico, which he bought in 1996, Buffett thrust upon them the idea of the Geico Platinum MasterCard. He thought that Geico policyholders would be good credit risks. As recounted in Fortune, he bet wrong.

Even before the recession (recession news) hit, the Geico card business ran up $6.3 million in pretax losses, prompting Buffett to admit defeat. Berkshire Hathaway eventually sold its credit card receivables for 55 cents on the dollar. The total cost: $50 million, which isn't that much given the size of Geico.

It's nice he can talk about his failures and take responsibility for them. Buffet wrote all about this in his most recent shareholder letter (shareholder news), in which he also urged financial services executives to do the same. Their losses--and their systemic significance--are gargantuan compared to Buffett's. 

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