Investment banking firm Goldman Sachs Group Inc gained the potentially influential support of legendary investor Warren Buffett late Tuesday.
The announcement that Buffett's firm, Berkshire Hathaway Inc, would buy a 5-billion-dollar stake in Goldman Sachs comes as the investment banking firm is converting itself to a normal bank holding company, a decision reached this week to obtain greater access to loans from the US Federal Reserve. The conversion will place Goldman Sachs under greater government scrutiny.
Buffett's investments are closely watched on Wall Street and by small investors. His purchase of a stake in Goldman Sachs could be influential in raising additional capital as the investment bank tries to stabilize itself during the ongoing US credit crunch.
Goldman Sachs' losses from soured mortgage securities have been far less than other investment banks, including Lehman Brothers, which declared bankruptcy last week.