Buffett joins Goldman bid for Fannie Mae tax credits

• On 9:44 pm EST, Tuesday November 3, 2009

NEW YORK (Reuters) - Warren Buffett's Berkshire Hathaway Inc (NYSE:BRK-A - News) has joined Goldman Sachs Group Inc (NYSE:GS - News) in a bid to buy $3 billion in tax credits from mortgage giant Fannie Mae, the Wall Street Journal's website reported, citing people familiar with the matter.

On Sunday the Journal reported that Goldman, the largest and most profitable U.S. investment bank, is in talks to buy millions of dollars of tax credits from Fannie Mae.

The Treasury Department, which controls Fannie Mae and Freddie Mac after pouring $100 million into the housing-finance giants, may block the sale on the grounds that it wouldn't benefit taxpayers, WSJ said.

The sales would come as the public rails against government moves that aid banking giants, which are preparing to lavish big bonuses about a year after receiving trillions in taxpayer rescue funds.

Goldman, which received federal bailout money last fall, in particular has come under fire for generating out-sized profits and preparing record bonuses as the economy continues to struggle. Buffett injected $9 billion into Goldman last fall through purchases of preferred stock.

The credits are worth little to Fannie Mae, which also records losses each quarter as their value declines.

Berkshire Hathaway and Goldman could not be reached immediately for comment. Treasury officials told the paper they are still reviewing the proposal.

The tax credits are incentives designed to bring more investment to low-income housing developments.

(Reporting by Joseph A. Giannone; editing by Carol Bishopric)

Buzz up!