Buffett pumps $5B into Bank of America

Berkshire Hathaway will invest $5 billion US into America's biggest lender, a vote of confidence in the U.S. economy by one of the world's richest investors.

Bank of America will sell preferred stock paying an annual dividend of six per cent to Warren Buffett's company. Berkshire Hathaway also has an option to buy 700 million warrants for $7.14 a share.

The move buoyed financial shares, almost all of which moved higher on the New York Stock Exchange. Bank of America shares gained almost 20 per cent to $8.27.

The move came a day after Bank of America was heavily sold off after investors worried that the largest U.S. lender would have to come to market with new shares to raise money to pay off yet another round of bad losses related to subprime mortgages.

Buffett made a similar bet on investment bank Goldman Sachs in 2008 that worked out very well for him. His $5 billion investment was finally repaid this year, but Buffett got a 10 per cent dividend yield for his vote of confidence while he owned the stake.

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Warren Buffett calls on 'mega-rich' to pay more taxes

Billionaire investor Warren Buffett is calling on his "mega-rich" friends to pay more in taxes, saying they've been protected too long from the government.

"My friends and I have been coddled long enough by a billionaire-friendly Congress," Buffett wrote in an op-ed piece in the New York Times. "It's time for our government to get serious about shared sacrifice."

Buffett said investment managers like himself can classify their income as carried interest, meaning they pay only a 15-per-cent tax rate.

"These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places," he wrote.

He said the mega-rich pay income taxes at a rate of 15 per cent on most of their earnings but pay practically nothing in payroll taxes. But he said the middle class pay somewhere in between 15 per cent and 25 per cent and also pay heavy payroll taxes.

Buffett said tax rates should be raised for those making more than $1 million and an additional increase for those who make $10 million or more.

"Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering," Buffett said.

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