Warren Buffett testified before the Financial Crisis Inquiry Commission this week. The financial media is calling his testimony a PR disaster for the legendary investor. I didn't see it that way at all. The whole event looked like a farce to me, and at the end only Buffett came out with the least mud on his shirt.

Let's look at each of the players in turn:

The Inquiry Commission (FCIC):

What was their objective? If they really wanted to get deeper into the ratings business, why was only Moody's called to the hearing - where were Standard & Poor's and Fitch? And why such an insistence on getting Buffett - they had to get him under subpoena eventually.

What were the board's qualifications to conduct such a hearing? The chairman, Phil Angelides, was California's State Treasurer from 1999 to 2007 - not the best credentials by the looks of their state budget. Ditto the Vice Chairman. If nothing else, you could be sure they had a personal axe to grind against big corporations.

Moody's

Buffett was wrong in saying Moody's shouldn't be singled out. So what if everyone else missed the housing bubble? Moody's' culture of integrity was gone way before the bubble, as noted in this excellent Huffington Post article. That was their epic failure which led to everything else. They had a responsibility to the public, and they failed miserably.

Maybe Buffett meant that Moody's shouldn't be singled out from the troika - Standard & Poor's and Fitch made the same mistakes, after all. But "everyone else is doing it" has never been a good argument. It didn't work on our mothers when we were young, and it doesn't work today.

Financial Media

It's so much fun to report on hearings like these, with millionaire CEOs getting humiliated and all those zingers flying back and forth. But where were you people when this crisis was unfolding? The culture at these agencies has been askew for more than half a decade - where was your investigative journalism then? Why wasn't anyone reporting on the excesses of Wall Street?

Hindsight is 20/20, and I don't need your armchair opinions on Buffett and Moody's and Goldman today, thank you very much. A little more before-the-event diligence would have been appreciated.

Investing public

Buffett's biggest point, one that went almost unreported: investors shouldn't have substituted any agency's ratings for their own due diligence. The people who trusted those ratings were a huge driver of this cycle of greed. By blindly trusting Moody's, people increased the desirability of their ratings, which meant ever more companies chased after those AAAs... coupled with the zero-integrity environment, you had a recipe for disaster.

One might argue that by 2007, most of these financial instruments had become too opaque, too complex for the ordinary investor to understand the inherent risks. Major hedge fund operators and institutional investors should be sophisticated enough, but let's say they weren't (due to laziness or ignorance or both). So they began to rely on rating agencies to do the dirty work (a.k.a. analysis) for them. Ergo, it became even more important that the ratings agencies acted with integrity, and since they didn't, they are to blame for the market crash.

While it's a decent argument, it doesn't help anyone. It's a bit like BP saying the Blowout Preventer should never have malfunctioned, and hence the oil spill is entirely Cameron International's fault (they made the device). And just like the leaking oil is BP's responsibility, what happens to your money is ultimately your responsibility. You invested in something you didn't understand, you were involved in the cycle of greed, so ignorance is neither a defense nor an appeal.

If it were raining outside, would you go out wearing suntan lotion just because the weatherman predicted sunny skies?

Warren Buffet

Read the minutes from Buffett's testimony. You can tell he's in top form (and peak mental health, hooraah!). And if you've followed his speeches/letters for even a short while, you know that he was speaking his mind out there, without evasiveness or lying. Even that bit about Moody's not being singled out - I think he sincerely believes it and probably has good reasons for it.

Like most of the businesses he owns, Buffett isn't involved in Moody's daily operations. His remarks indicate he isn't too happy with their performance either - and at present is only invested in the firm because he can't get a good enough price.

Overall, I have little faith that these inquiries will get us anywhere. That's a shame because we really need some good legislation, and fast. Such public-shaming meetings achieve nothing.