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BY KIM ST. ONGE

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Buffet to the rescue? Multi-billionaire Warren Buffett’s investment company -- Berkshire Hathaway announced Thursday it’s investing five billion dollars in Bank of America.  
MSNBC says this could be just what the struggling bank needs to restore confidence.

“This is a bank of course whose shares have been driven to the ground lately. In fact the stock has fallen by nearly 30 percent since the beginning of August alone over concerns it doesn’t have enough capital so this is a huge vote of confidence for this bank and not only is Bank of America up today by 13 percent but all of the other banks in the sector are moving higher as well.”

This isn’t the company’s first big investment. The Los Angeles Times points out a 2008 Berkshire investment helped restore the market.

“The investment by Berkshire Hathaway is reminiscent of a $5-billion investment Buffett made in Goldman Sachs in September 2008 in the depths of the financial crisis. That injection of capital helped restore confidence in Goldman and helped the Wall Street firm attract other investments.”

Now investors wonder how his latest investment will play out. CNBC suggests Buffet’s 700 million share purchase will significantly help the market.

“There’s no doubt that that will be viewed as positive, we’re watching the stock up 21 percent right here or perhaps this will be the sign people have been looking for. ”
 
Some analysts question why the legendary investor is making the multi-billion dollar bank investment with BofA when he’s already BFF with Wells Fargo. But, Buffett told CNBC this investment couldn’t come at a better time.

“He thinks Bank of America and Wells Fargo have two the best composite franchises in the United States. Now he does say Bank  of America has some significant problems in their past but they’re working their way through them.”

Despite what others may think, Buffett told MSN he remains confident about his purchase.

"Bank of America is a strong, well-led company... I am impressed with the profit-generating abilities of this franchise and that they are acting aggressively to put their challenges behind them.”

Buffett told CNBC his idea to invest 5 billion dollars in the world’s largest bank came to him while he was taking a bath.

 

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