THE big banks have become too large to manage their own risks properly, Warren Buffett, the world’s most successful investor, warned last night. Their size had led to the recent meltdown in financial markets.

Buffett’s business partner Charlie Munger said a “crazy culture of greed and overreaching” had led to the excesses of the credit crisis and was “counter-productive for the country”.

Speaking at the annual meeting of his company Berkshire Hathaway, Buffett said: “We have clearly seen in the past year situations where, if the chief executive knew what was going on, he didn’t let on.” Sometimes, Buffett said, it was “less embarrassing to say you didn’t know what was going on”.

He believed that the worst of the global credit crunch was over, but the after-effects would continue to be felt by homeowners.

Munger said the credit crisis made the collapse of the energy giant Enron “look like a tea party”. After the Enron crisis, the American government brought in new legislation to clamp down on financial fraud. “Now it’s turned out that they hit an elephant with a peashooter,” said Munger.

Up to 32,000 people are believed to have attended this year’s annual meeting of Berkshire Hathaway in Omaha, Nebraska. Ahead of the meeting, the company reported a sharp fall in first-quarter profits as underwriting income fell. It also revealed $1.7 billion (£860m) in unrealised derivatives losses. The company’s quarterly profit plunged 64% to $940m.

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