Why Warren Buffett could lose $8B

Berkshire Hathaway Inc., the company run by billionaire Warren Buffett, may have to set aside $8 billion in collateral for derivatives under proposed changes to U.S. financial regulations, a Barclays Capital analyst said.

Berkshire owns derivatives with a notional value of about $62 billion and has “negligible” collateral requirements, Barclays analyst Jay Gelb said today in a report. Buffett’s firm, based in Omaha, Nebraska, may need to post $6 billion to $8 billion in collateral under rules being debated by the U.S. Congress, he said.

David Sokol, chairman of Berkshire’s energy business and one of Buffett’s top managers, told CNBC in April that $6 billion to $10 billion may be needed. Buffett, 79, said in May that Berkshire may not be affected by the rules because lawmakers are likely to focus only on weaker companies.

The U.S. House of Representatives is debating the financial-overhaul bill in advance of a final vote, moving closer to enacting the biggest rewrite of Wall Street rules since the Great Depression. Among the provisions that may become law is a requirement for corporations to post collateral for certain derivatives contracts, according to the International Swaps and Derivatives Association.