Buffett favorite forced out at General Re
It looks like prosecutors got their way at Berkshire Hathaway (BRKA). The Omaha, Neb., conglomerate said Monday that Joseph Brandon, CEO of its General Re unit, “has decided to resign effective today.” The decision comes just a week after The Wall Street Journal reported that federal prosecutors were demanding Berkshire replace Brandon to pave the way for the end of a long-running probe of General Re.
Brandon was running the company when it did a reinsurance deal with AIG (AIG) that allowed the big insurer to make its reserves look stronger than they really were. Four former General Re execs were convicted in a criminal fraud trial tied to that episode, including Elizabeth Monrad, who reported directly to Brandon.
Brandon had been a favorite of Berkshire chief Warren Buffett’s, as noted in Berkshire’s annual report. But that doesn’t mean his departure is necessarily a big blow for the company. His successor, Tad Montross, won praise in this year’s report as well. Even so, Felix Salmon argues at Portfolio.com, the reality is that Buffett caved in.
Meanwhile, Buffett says in the latest issue of Fortune that the credit crisis is far from over - though he sees opportunity, Nicholas Varchaver writes, in the hard-hit auction rate securities market.
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