Buffett backs financial reform, says economy improving

Wall Street needs to change its behavior and executives asking for government support should feel financial pain, billionaire Warren Buffett said today. 

Besides voicing support for financial reform, Buffet was upbeat on the economic recovery and the future of Goldman Sachs CEO Lloyd Blankfein, who he said should keep his job despite civil charges and an ongoing criminal case against the investment firm.

"I think you have to do something to change behavior of CEOs and directors," said Buffett, CEO of Berkshire Hathaway and Goldman's largest shareholder, Monday on ABC's "Good Morning America." 

"I think it's disgusting that you've got all of these failures of major institutions that the government has had to step in for society reasons to help and, basically, all the CEOs that caused all the trouble went away rich."

Buffett suggested new policies that would require "the CEO and his wife go broke" if a company needs help from the federal government. 

"That would change behavior." 

Buffett, who has worked with Goldman for nearly half a century, abacked Blankfein, who underwent a grilling last week on Capitol Hill about his firm's actions leading up to the crisis. 

"I would be disappointed if he stepped down," he said. 

To stabilize Goldman, Buffett invested $5 billion into the firm during the 2008 financial crisis, an investment that pays at a 10 percent rate, totaling $500 million a year, making him the Goldman's largest shareholder.  

Whether Goldman did anything wrong, Buffett said "I have no knowledge of anything they've done." His purpose is to "do business with them."

In Buffett's experienced eyes, "in May and April, the economy's come on pretty strong." He predicted that within a year, the residential housing problems will be behind us.