We learned something important at Wednesday's Financial Crisis Inquiry Commission: the power of the duopoly privilege enjoyed by Moody’s and Standard & Poor’s is what drew Warren Buffett to make his Berkshire Hathaway the biggest shareholder in Moody’s.

And what’s more: Buffett profits when the coddled nature of the duopoly encourages Moody’s or S&P to make mistakes when rating bonds.

In his testimony to the Commission, Buffett cited the “pricing power” that Moody’s enjoyed thanks to its duopoly status as what made the company’s stock an attractive investment.

“The long term value was ... the duopoly ... incredible pricing power," Buffett said.

In an earlier interview with Becky Quick, Buffett explained how this pricing power came about. “They got enshrined into various regulations. We have a life insurance company. It tells us what we can do in terms of BBB or in terms of A and all of that sort of thing," said Buffett.

So state after state has regulations relating to insurance companies that ties in with the rating agencies. And the agencies are specified. And so I can't go to the XYZ rating agency and say, ‘Will you do this for half the price,’ and have it accepted by anybody,” Buffett said.

Buffett called the creation of the duopoly a “natural evolution” in his testimony. But that is only accurate if you consider government regulations—from state insurance rules to the SEC’s designation of only a handful of companies as acceptable ratings agencies—to be a natural phenomenon.

More precisely, it was a political or bureaucratic phenomenon—the outcome of decisions regulators who may or may not have understood that they were creating barriers to entry for credit ratings.