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Buffett Says Credit Crisis Ebbs for Wall Street Firms (Update1)

By Josh P. Hamilton and Betty Liu

May 3 (Bloomberg) -- Billionaire Warren Buffett, chief executive officer of Berkshire Hathaway Inc., said the worst of the credit crunch has passed for Wall Street and the Federal Reserve probably averted chaos by rescuing Bear Stearns Cos.

``Certainly the worst of the crisis in Wall Street is over,'' Buffett said in an interview on Bloomberg Television before Omaha, Nebraska-based Berkshire's annual shareholder meeting today. ``In terms of people with individual mortgages, there's a lot of pain left to come.''

Buffett, the world's richest man according to Forbes magazine, said the Fed acted properly when it helped arrange a buyout of New York-based Bear Stearns by JPMorgan Chase & Co. and that he turned down the opportunity. A failure to step in by regulators might have caused other firms to fail and led to a wider panic, he said.

``The worry was that there would be contagion; it was a very real worry,'' Buffett said. ``It could've been a very, very, very chaotic situation.

Berkshire's own investment in derivative contracts recovered between $500 million and $600 million of lost value since the end of March, he said. Berkshire said yesterday the value of the investments had declined by $1.7 billion in the first quarter.

To contact the reporters on this story: Josh P. Hamilton in Omaha at [e-mail].

Last Updated: May 3, 2008 09:41 EDT

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