What is ' AAA toxic creations'? Buffett pointed out that it was Congress that presided over the two largest mortgage entities in the world, Fannie Mac and Freddie Mac, and both are in receivership. As for the rating agencies, especially Moody’s, in which Berkshire owns a 20% stake, Munger noted that they are good at fancy math and, as with the man with the hammer, treated each problem like a nail. Going forward, Buffett believed the rating agencies are good businesses: there are few competitors, they affect a large segment of the economy and they don’t require much capital (though they are still very much attackable). Buffett noted that the biggest surprise may have been that so many of these AAA toxic creations ended up in the hands of the creators themselves. They drank their own Kool-Aid. Stupidity ran wild, and “everyone else was doing it” became the primary rationale. It’s hard to stop once there is such widespread industry acceptance.