Transcript: Free Pass for Buffett?

This is a partial transcript from "Your World with Neil Cavuto," April 11, 2005, that was edited for clarity.

NEIL CAVUTO, HOST: Is the press giving Warren Buffett a free ride or a tough ride?

Well, when it comes to a free ride, David Ruder, the former chairman of the SEC and professor of law at Northwestern University, simply does not agree.

David, good to have you with us.

DAVID RUDER, FORMER SEC CHAIRMAN: Nice to be here.

CAVUTO: What do you make of this Warren Buffett himself being called in for questioning, whether or not it's about anything sinister?

RUDER: Well, you know, his name has been mentioned. And I think the authorities are going to be asking him questions to see if he has any information. What he has to do is tell the truth. And if there's nothing to hide, he'll be just fine.

CAVUTO: All right, but this concerns a division of his empire, General Re, which had a relationship with AIG, a company under fire. He can claim that he didn't know the details of that transaction, but isn't that sort of the same thing we have said of other big honchos who have been dragged into trouble?

RUDER: Well, I tend to think that people are innocent until you have facts that show they're guilty, so I would say, if he says things are a certain way, then one ought to believe him.

There's plenty of evidence against people who lie. And his motivation should be to tell the truth. And if he tells the truth and there's nothing wrong, he's fine.

CAVUTO: But, again, we do seem to have a double standard with those who seem to be called in on this issue of responsibility and then maybe, as some critics have warned Buffett has said, giving him a free pass because he's Warren Buffett.

RUDER: I don't think it's a free pass.

They're going to ask him questions. And they are not going to be easy. If you've ever been interrogated by officials at the SEC or people with criminal power, you know the questions are going to be tough and his answers will have to be forthcoming.

CAVUTO: You know, David, the whole idea of reinsurance is to protect insurers, to sort of hedge potential losses that they might face down the road.

RUDER: That's right.

CAVUTO: The issue with General Re is whether it overdid it. And I'm vastly oversimplifying things here, but what if it's found that General Re was guilty of improprieties? I know you are saying innocent until proven guilty, but what would that potentially say of Warren Buffett, as, ultimately, the big cheese at the parent company?

RUDER: Well, in a sense, he has to accept responsibility for what's going on at all levels of his company.

But, in another sense, he's a manager. And the manager can't know everything. If he behaves the way I would expect him to behave, if there's something wrong, heads will roll and he will tell what the problem is. But to claim that he is somehow culpably involved without more facts I think is an overstatement.

CAVUTO: All right, David Ruder, the former SEC chairman, always a pleasure. Thank you, sir.

RUDER: Thank you.

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