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Special Report

Revelations From the Regulation Bill

New York and Washington woke up today to news that the financial regulation bill now before the Senate had run afoul of none other than the legendary investor Warren Buffett.

At issue is the bill's crackdown on derivatives (those complex financial instruments that were used for so much gambling on Wall Street before the big meltdown).

But the proposed restrictions, it seems, would cause problems for Buffett's company, Berkshire Hathaway.

Warren Buffett is known for two things: investing acumen and unwavering integrity. When he makes an investment, his interests are aligned with those of his shareholders because all his money is in Berkshire Hathaway, too. And one of his major investments in recent years was a big utility called Midwest Energy Holdings, which makes extensive and wholly legitimate use of derivatives in the form of energy futures contracts to hedge against spikes in fuel prices.

The Senate bill, it seems, is so poorly drafted that it, like the rain, would fall on the just and unjust alike; on both the responsible and the irresponsible use of derivatives. Efforts to fix the problem have so far failed.

The episode provides a useful reminder of two things: One is the unintended consequences that inevitably flow from Congress's periodic fits of regulatory zeal. The other is the vital role that affected parties (also known as special interests) and dare I say it, their lobbyists, play at such times. They are often the good guys.

Brit Hume is the senior political analyst for Fox News Channel.