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Warren Buffett’s investments in financial firms

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NEW YORK, March 23 (Reuters) – Berkshire Hathaway’s Warren Buffett has been in discussions with senior Biden administration officials about the banking crisis, leading some to speculate that Buffett would consider investing in the sector following the collapse of Silicon Valley Bank.

Buffett has been known to invest during difficult periods for the market, famously buying a stake in Goldman Sachs during the financial crisis and in Bank of America when that bank ran into trouble a few years later.

Here is history on Buffett’s involvement with banks and current holdings in his investment portfolio.

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BUFFETT ENGAGEMENTS WITH BANKING

Berkshire began investing in Wells Fargo & Co (WFC.N) in

1989, building an eventual $32-billion stake, but exited that stake in the first quarter of 2022 amid a series of scandals for the bank.

Berkshire injected $5 billion into Goldman Sachs Group Inc (GS.N) in September 2008 at the height of the global financial crisis in a vote of confidence for the Wall Street bank.

The investment gave Berkshire preferred stock that paid a 10% along with warrants to pay $5 billion for 43.5 million Goldman shares at $115 each.

Berkshire invested another $5 billion in Bank of America (BAC.N) in August 2011, when investors feared that the bank could run short of capital because of losses from litigation and its mortgage business following the disastrous acquisition of Countrywide Financial Corp.

That investment gave Berkshire preferred stock with a 6% dividend and warrants to pay $5 billion for 700 million Bank of America shares at $7.14 each; Berkshire later made a $11.5 billion profit on that investment in 2017, not including the dividend payouts.

The following are Berkshire’s disclosed holdings in

U.S.-listed banks and financial services companies as of Dec.

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Opposition pledges even more investment in Surrey hospital | CTV News – CTV News Vancouver

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A day after the NDP government presented its 30-point plan to address the crisis at Surrey Memorial Hospital, the official Opposition is pledging to build a tower, while acknowledging their role in the situation.

Front-line sources at SMH tell CTV News they’re cautiously optimistic about the expansion of the hospital, but worry the provincial government may not see it as a “first step in the right direction” as they do, with more investment and attention needed in the future.

Members of the BC United party toured the hospital Thursday morning and spoke to reporters about crowded conditions and frustrated staff they observed.

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“We can’t incrementalize ourselves out of a crisis, we have to treat it like a crisis,” said leader Kevin Falcon, slamming the New Democrats for holding a flurry of meetings only after health-care workers went public with warnings they say were ignored by Fraser Health and the province for months. 

“They’re in their sixth year of government and only now they’re deciding this is a crisis because the doctors have been speaking with one voice?” said Falcon.

BC United is promising another tower to further expand the hospital, acknowledging that when Falcon was finance minister and approved a $500 million expansion it should’ve been an $800 million investment instead.

When CTV News asked if that meant he was accepting some responsibility for the current government’s need to play catch-up to years of underfunding relative to the population growth in Surrey, Falcon said he did.

“I’ve always said that about Surrey – whatever we think we have to do, we should do more,” he responded. “Let’s just assume there’s enough blame to go around.” 

Health Minister Adrian Dix has repeatedly blamed the then-Liberal party for under-resourcing Surrey, but his government has continued this trend. An analysis by the Surrey Hospitals Foundation concluded that Fraser Health residents see a per capita spend of $2,229 per year in provincial funds, compared to $3,677 per capita for Vancouver Coastal Health residents.

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FP Answers: Can opening a joint investment account with my teenager reduce my taxes? – Financial Post

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Putting investments in his name just to save tax and then using the money as if it were your own may be offside

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By Julie Cazzin with Andrew Dobson

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Q: After 30 years of being a DIY investor, I have built up a $1.5-million stock portfolio by reinvesting the dividends for many years. If I open a joint account with my son Lenny, who is 19 years old, and he receives the dividends in cash, who pays the tax? Is this a good way to reduce taxes in our household? If not, can you recommend a better option? — Thanks, Nicholas P.

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FP Answers: To understand the potential benefits of income splitting in this case, we should first review the income attribution rules, which discourage income splitting to avoid paying higher taxes. However, there is no income attribution on gifts to adult children, which means that if you give money to an adult child to invest, any income earned would be taxable to that child, not back to you.

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By comparison, income earned on money gifted to a minor child is attributed back to a parent. That is, the income is taxable to a parent. However, capital gains are not considered income in this case, just dividends and interest from investments.

If you gave your son money to invest, your family may be able to save tax if his tax rate is lower than yours. It would need to be an outright gift, though. Putting investments in his name just to save tax and then using the money as if it were your own may be offside.

It also bears consideration, Nicholas, that gifting some of your existing investments to your son may trigger capital gains tax if you sell investments for a profit. Even if you gifted half the account to him and added his name jointly onto the existing account, deferred capital gains would be triggered. You would be considered to have sold half the investments — a deemed disposition — and this would trigger any accrued capital gains.

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You could lose control over the money, though, and this would allow him to access 100 per cent of the investments as if he held them solely as his own. This could also expose your hard-earned savings to his creditors or to a family law dispute with a spouse or common-law partner.

If you wanted to put some money in your son’s name, but maintain full control over the capital amount, you could set up a discretionary family trust. This essentially protects the money from his unimpaired access because you would be the trustee in charge of the money, and be making the investment and distribution decisions. But a trust has costs. Upfront legal fees may be $5,000 or more, and annual accounting and legal fees could be $1,000 or more.

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There may be an advantage to being joint owners on the investment account for estate-planning purposes. The assets in a joint account may be transferred to your son upon your death rather than forming part of your estate. That said, some or all of a jointly held account may be considered an estate asset for purposes of calculating the estate administration tax.

There are other opportunities for income splitting that may be much easier and less risky. For example, you can gift your son money to contribute to his tax-free savings account (TFSA). He will have started to accrue TFSA room as of the year he turned 18. You could also help him put money towards his registered retirement savings plan (RRSP) contributions, but this requires earned income to create RRSP room. You could even start funding a first home savings account.

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  1. This retiree has about $30,000 of net rental income total from two rental properties, which creates RRSP contribution room.

    What’s the best way to use RRSP room from rental income?

  2. Service Canada is mandated to split CPP credits when it receives an application  following a divorce.

    What kind of CPP split can I expect from my former spouse?

  3. A large financial windfall comes with many questions, mixed feelings and stress.

    What should this couple do with a $4.7-million lottery win?

All three accounts would be in his name, but would legitimately save tax for you and your family, while helping your son get a head start on building his own stock portfolio to follow in his father’s footsteps.

Andrew Dobson is a fee-only, advice-only certified financial planner and chartered investment manager at Objective Financial Partners Inc. in London, Ont. He does not sell any financial products whatsoever. He can be reached at adobson@objectivecfp.com.

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Why has Labour U-turned on its green investment pledge? – Yahoo Canada Sports

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A wind turbine being built near Workington

The promise was clear. And it was prominent.

At Labour’s 2021 conference, shadow chancellor Rachel Reeves announced her ambition to be the UK’s first “green” chancellor.

To stress her bona fides, she pledged to invest £28bn a year, every year to 2030 to “green” the economy.

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Labour’s Green Prosperity Plan was one of its defining policies. It gave the party a clear dividing line with government.

Ms Reeves said there would be “no dither, and no delay” in tackling the climate crisis.

It was also an answer to the government’s “levelling up” pledge.

The borrowed cash would underpin well-paid jobs in every corner of the UK in the energy sector.

So why has Ms Reeves kicked the pledge into the second half of the next Parliament, if Labour wins?

The first reason is obvious.

Ms Reeves now says she was “green” – in a different sense of the word – in 2021, in that she hadn’t foreseen what then-Prime Minister Liz Truss would do to the economy.

With interest rates up, the cost of borrowing rises too, making the £28bn pledge more expensive to deliver.

And Ms Reeves wants to emphasise that if any spending commitments clash with her fiscal rules, the rules would win every time.

But did the £28bn green pledge really clash with her rules?

In their own detailed briefing on their fiscal rules, Labour said: “It is essential that for our future prosperity that we retain the ability to borrow for investing in capital projects which over time will pay for themselves.

“And that is why our target for eliminating the deficit excludes investment.”

So borrowing to invest in the future technology and jobs shouldn’t fall foul of that fiscal rule.

Chart showing interest rate rises (May 2023)Chart showing interest rate rises (May 2023)

Chart showing interest rate rises (May 2023)

But there is another rule which Ms Reeves cited this morning – to have debt falling as a percentage of GDP or Gross Domestic Product, a measure of economic activity.

Meeting that rule may have contributed to putting the £28bn on the backburner – though I remember at the 2021 conference some senior Labour figures questioning the wisdom of borrowing the equivalent of half the defence budget every year even then.

And some senior figures in Labour are far less convinced that £28bn would necessarily bust the debt rule – economic forecasts can change by far greater margins.

One of the other justifications for the change of position is that £28bn shouldn’t be poured in to the economy straight away.

That’s because it will take time to train workers, to create and bolster supply chains. Hence “ramping up” to £28bn.

One shadow minister said that while today’s announcement felt like a bit of a handbrake turn, it was nonetheless inevitable and sensible.

The scale of the ambition remained the same, but pragmatically the shadow chancellor was simply not committing to spending which would be difficult to deliver.

But all this must have been known in 2021, too.

So why announce the U-turn today?

The change of position was discussed within Labour’s Treasury team for some time.

Engagement with investors convinced them the government itself may not need to pump in a huge amount of cash straight away – the private sector would provide green jobs without state help.

And while Ms Reeves has ditched the £28bn pledge in the first half of the Parliament, this doesn’t mean that a Labour government would spend nothing on its Green Prosperity Plan.

I understand cash will be prioritised for projects where the private sector would not commit without state assistance – nuclear and hydrogen for example.

But it seems clear that politics and not just economics played a role in today’s announcement.

Tory attacks

There have been grumbles and growls over how the policy has landed over the past two years within Labour’s ranks and internal criticism has increased, not receded.

One concern was that the amount to be borrowed – the £28bn – was better known than what the money would buy – from home insulation and heat pumps to new carbon capture technology.

But it was crystal clear this week that the Conservatives felt that they had seen a vulnerability that could be exploited.

The front page of the Daily Mail blared this week about the alleged dangers of the policy – the extra borrowing would put up interest and therefore mortgage costs.

The independent Institute for Fiscal Studies was also being cited by Conservative ministers.

Its director Paul Johnson had warned that while additional borrowing would pump money in to the economy, it also drives up interest rates.

As Labour has been attacking the Conservatives for their handling of the economy, and the “mortgage premium” they claim the government has caused, it was understandable that they did not want the same attack to be aimed at them, and Ms Reeves this morning sought to eliminate a potential negative.

As one Labour shadow minister put it: “They [the Conservatives] will be pulling their hair out that one of their attack lines has failed.”

Some in Labour’s ranks, though, believe the party should have insulated (no pun intended) itself from attack by making the case more stridently that borrowing to invest is different from borrowing to meet day-to-day spending.

Credibility is key

Labour’s opinion poll lead is wide but pessimists in their ranks fear it is shallow.

Establishing economic credibility is seen as key.

But while it may have been the lesser of two evils, today’s change of tack isn’t cost-free.

The party has committed to achieve a net-zero power system by 2030.

But with potentially significantly less investment, is this target in danger too?

And unlike many of the left-wing commitments that have been ditched – where the leadership don’t really mind the backlash – this was the shadow chancellor watering down her own highest-profile pledge.

That in itself has allowed the Conservatives to shout about Labour’s economic plans being “in tatters”.

As Labour is still committed to its Green Prosperity Plan – just not the original timescale – they will still claim they have clear dividing lines with the government.

But one of their key arguments has been this: With the US pouring subsidies in to domestic green industries, the UK will get left behind if it doesn’t follow suit. And fast.

A delay doesn’t destroy – but it does potentially weaken – the Labour case.

But there is another concern amongst those who are most certainly not on the Corbyn left.

Emphasising competence and fiscal credibility over climate change commitments could leave some target voters cold.

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