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OMAHA, Neb. - Warren Buffett's Berkshire Hathaway Inc. is investing at least $5 billion in Goldman Sachs, a huge vote of confidence for one of the survivors of the credit crisis that felled two of its investment banking peers.

In addition to buying $5 billion in preferred stock, Berkshire also got warrants to buy another $5 billion in Goldman's common stock. Goldman also said late Tuesday it would raise another $2.5 billion in its own public stock offering.

The news sent shares of Goldman Sachs and stock index futures soaring in electronic trading, after the Dow Jones Industrial Average posted a triple-digit decline for the second day in a row.

It also could lead to new probing questions from lawmakers today for Treasury Secretary Henry Paulson, a former co-CEO of Goldman Sachs. He and Federal Reserve Chairman Ben Bernanke told Congress hours before the Berkshire deal was announced that quick action on a $700 billion bailout measure for financial services firms was needed to prevent economic havoc. Now members of Congress, who are deadlocked with the Bush administration over details of the bailout plan, have to deal with what may look to many taxpayers like Wall Street is already cashing in.

Buffett, one of the most successful investors in history, made no mention of what is happening in Washington, but he did heap praise on Goldman Sachs, whose shares had been tumbling ahead of the announcement of the government rescue plan last Friday.

''Goldman Sachs is an exceptional institution,'' the chairman and CEO of Berkshire Hathaway said in a news release. ''It has an unrivaled global franchise, a proven and deep management team and the intellectual and financial capital to continue its track record of outperformance.''

Buffett's investment comes two days after Goldman Sachs Group Inc. and Morgan Stanley, the last two independent investment banks on Wall Street, won approval from the Federal Reserve to change their status to bank holding companies.

By becoming commercial banks, the two companies avoided the fate of Bear Stearns and Lehman Brothers - the first taken over in a fire sale and the second now bankrupt - by giving them broader access to borrow federal money and the ability to build a stable base of deposits.

But it also comes with closer regulatory oversight that likely limits its ability to generate the kinds of sky high profits that were topped by few others companies.

The strict rules set by the Federal Reserve will limit opportunities for big payoffs from what is known as proprietary trading, using borrowed funds to place high-octane bets on everything from the price of oil to currencies and other commodities.

Berkshire's preferred stock in Goldman will pay 10 percent and can be bought back any time at 10 percent premium. The warrants allow Berkshire, which in Utah owns RC Willey and Rocky Mountain Power, to buy $5 billion in common stock at $115 per share any time over the next five years.

Goldman's shares rose $4.27, or 3.5 percent, to close at $125.05 Tuesday in the regular trading session, and jumped another $8.46, or 6.8 percent, to $133.20 in after-hours trading following the announcement of Buffett's investment.

Morgan Stanley's shares rose 91 cents, or 3.4 percent, to $28 in the regular session, then soared $3, or 10.7 percent, to $31 in after-hours trading.

Morgan Stanley got its own cash infusion on Monday, agreeing to sell a 20 percent stake for more than $8 billion to Mitsubishi UFJ Financial Group, Japan's largest bank.

Analyst Mark Lane said he had expected Goldman and Morgan Stanley to raise capital after getting the Fed's approval to become bank holding companies. Buffett's investment ''sends a pretty strong message of support for the independent-bank business model,'' Lane said. ''It sends a stabilizing signal to the market.''

Related developments

* Investors are cautiously returning to battered money-market mutual funds after the government intervened to stem a massive pullout by money managers that threatened to expose individual investors to unprecedented losses for the normally safe investments. A firm that monitors fund flows said assets have risen $5 billion, to $3.3 trillion.

* Demand soared for both short- and long-term government maturities late in the day as the credit markets grew more tense. The Treasury plans to sell $34 billion in 2-year notes today and $24 billion in 5-year notes Thursday - unprecedented amounts. The yield on the 3-month Treasury bill was at 0.79 percent by late Tuesday, down from 0.88 percent late Monday. A month ago, the yield on the 3-month T-bill was 1.69 percent.

* Fed Chairman Ben Bernanke told Congress the government should pay more than ''fire-sale'' prices for the toxic assets it would acquire under the proposed $700 billion bailout plan. That could mean both higher initial costs for taxpayers and reduced returns when the assets are later resold.