Berkshire Hathaway 1994 Annual Meeting Audience Question # 21

Charlie explains why Wesco Financial sold its shares on Mutual Savings and Loan

Warren Buffett:

Zone 2.

Audience Member:

I’m Kelly Ranson from San Antonio, Texas.

And I wondered if you could comment on the Mutual Savings and Loan. There was just a footnote that the deposits have been assumed by a federal savings bank.

And also, what about the annual report for Wesco Financial that I know it used to be in the annual report for Berkshire. Just wondered if you could comment on that, please.

Warren Buffett:

The question is about… we… our 80 percent-owned subsidiary Wesco Financial sold its ownership in Mutual Savings and Loan of Pasadena last year. I’ll let Charlie comment on that.

And then the second question is about the Wesco report, which is available to any Berkshire shareholder simply by writing Wesco. But, we found that the stapling problems and other things made it a little difficult to keep adding that every year to the report. So, now we just… we make it available to anyone who would, at Berkshire, who would like to have it.

But Charlie, want to comment on the sale of Mutual?

Charlie Munger:

Yes. The savings and loan business became very much more heavily regulated after the huge nationwide collection of scandal and insolvency and so on.

And meanwhile, we had a very small savings and loan association. And the combination of the new regulation, and the fact that it was a very small part of our operation, made us decide that we were better off without it.

That does happen from time to time in Berkshire. We do exit once in a while.

And, by the way, we would reserve the right to change our mind. I always liked Lord Keynes when he said that he got new facts or new insights, why he changed his mind and then he’d say, what do you do? So we changed our mind.

Warren Buffett:

They start… they asked our directors at Mutual to start going to school on Saturday, didn’t they, Charlie? Or something? I think that helped change our mind about Mutual.

Charlie Munger:

There’s a time to vote with your feet.

Warren Buffett:

And even your wallet.

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