DealZone

Reuters correspondent Jonathan Stempel reports that whenever the dust settles from turmoil in the bond industry, there’s likely to be one familiar winner sitting atop the debris.

Berkshire Hathaway’s Warren Buffett is well-positioned to cash in whether bond insurers get rescued as regulators seek possible new sources of capital for them, or suffer credit rating downgrades that threaten their business, or even their survival.

Berkshire, which created Berkshire Hathaway Assurance Corp on December 28 to enter the bond insurance market, has the balance sheet, credit ratings and pedigree to gain a strong foothold and become a major force, experts said. In creating a bond insurer, Buffett is counting on issuers paying him higher fees for the security of having the backing of “triple-A” rated Berkshire and its $47.08 billion cushion of cash.

He has not shown any interest in bailing out an entire business, as he tried in 1991 when he took over Salomon Brothers after a scandal involving fictitious bids on U.S. Treasury sales. That is considered one of Buffett’s worst investments.

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