Buffett says U.S. in recession; banks to face pain

OMAHA, Nebraska (Reuters) - Warren Buffett on Sunday said he does not expect financial markets to panic as write-downs and losses for bad debts mount in the financial services industry, but said those losses were not over "by a long shot."

The world's richest person, who runs Berkshire Hathaway Inc (BRKa.N: Quote, Profile, Research, Stock Buzz) (BRKb.N: Quote, Profile, Research, Stock Buzz), said at a press conference the Federal Reserve brought markets back from a precipice in March in helping broker JPMorgan Chase & Co's (JPM.N: Quote, Profile, Research, Stock Buzz) purchase of Bear Stearns Cos BSC.N, which was on the brink of bankruptcy.

"There's going to be more pain, sure," Buffett said. "The action of the Fed, in terms of Bear Stearns, prevented in my opinion the contagion where you're essentially going to have bank runs on the investment banks ... The idea of a financial panic ... has been pretty well taken care of. That was a watershed event."

He added, though: "That doesn't mean the losses are over by a long shot ... We've looked at some of the investment banks, and it's clear some more losses are going to be incurred."

Buffett also praised Wells Fargo & Co (WFC.N: Quote, Profile, Research, Stock Buzz), the nation's fifth-largest bank. Berkshire is by far the bank's largest shareholder. "I predict Wells will be earning a lot more money 10 years from now," Buffett said.

(Reporting by Jonathan Stempel, editing by Maureen Bavdek)