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Stocks fluctuate after Buffet/Goldman Sachs deal -- 5-10 billion dollar investment
NEW YORK — Financial markets were tense Wednesday, with stocks fluctuating following investorThe credit markets showed added strain as investors await news about the government's plan to rescue banks from crippling debt.
Warren Buffett's decision to invest $5 billion in Goldman Sachs Group Inc.
Buffett's Berkshire Hathaway Inc. said Tuesday it was investing at least $5 billion in Goldman _ a move Wall Street took as a sign of support for the independent investment bank model.
Besides buying $5 billion in preferred stock, Berkshire also got warrants to buy another $5 billion in Goldman's common stock.
Goldman Sachs also said it will sell $5 billion worth of common stock to the public; the company and Morgan Stanley earlier this week were granted approval to become bank holding companies, which would help them strengthen their balance sheets.
Though Buffett's move appeared to soothe some investors, it didn't alleviate concerns about the effectiveness of any government bailout and about the health of the broader economy. ItHe and Federal Reserve Chairman Ben Bernanke are appearing before Congress for a second day Wednesday to brief lawmakers on a $700 billion bailout measure for financial services firms.
could also lead to new questions from lawmakers for Treasury Secretary Henry Paulson, a former co-CEO of Goldman Sachs.
Their appearance on Capitol Hill Tuesday unnerved investors, who questioned whether lawmakers were beginning to doubt the necessity and form of the government bailout.