Peter Wallison, a commissioner on the panel, said at a hearing in September that Bear Stearns Cos.'s rescue by JPMorgan Chase & Co., facilitated with government guarantees, was the "original sin" made by regulators in 2008 because it signaled that other firms would get aid.
"Participants in the market thought that all large firms, at least larger than Bear Stearns, would be rescued," Wallison said. "Companies probably didn't believe they had to raise as much capital as they might have needed because the government would ultimately rescue them, and fewer creditors were going to be worried about their capitalization."
'Crazy Price'
In other remarks to the commission, Buffett said Bank of America Corp. overpaid for Merrill Lynch & Co. in a deal struck the same day Lehman Brothers Holdings Inc. filed for bankruptcy in 2008.
Ken Lewis, then the chief executive officer of Charlotte, North Carolina-based Bank of America, "paid a crazy price, in my view," Buffett said in remarks released yesterday by the commission. "He could have bought them the next day for nothing because Merrill was going to go when Lehman went." Bank of America completed its $18.5 billion purchase of Merrill Lynch in January of 2009.