buffet, virtue ,liabilities and subprime

More bank failures are possible this year, Buffett said, and he suggested penalties should be meted out to people who spread rumors about the solvency of investment banks. Speculation about cash shortages contributed to a run on Bear Stearns Cos. and its forced sale to JPMorgan Chase & Co. earlier this year.

``If your virtue is questioned, you've got a problem,'' he said. In the normal course of business, ``there is no investment bank that can pay all its liabilities tomorrow.''