OMAHA, Nebraska (AP) – Companies have been borrowing too much money and executives need better incentives, billionaires Warren Buffett and Charlie Munger said Sunday.

Berkshire Hathaway’s top executives said those are key lessons from the ongoing financial turmoil. Buffett and Munger held their annual news conference on Sunday.

Buffett said having severe disincentives for failure and proper incentives for success is key to ensuring large financial institutions are run well.

He said Fannie Mae and Freddie Mac show that intense regulation can’t prevent problems because those troubled mortgage finance firms were some of the most regulated companies.

Munger said the nation tolerated way too much immorality and stupidity, and that companies took on too much debt.

Earlier, Buffett said most of the banks the U.S. government is evaluating with stress tests are not too big to fail.

Buffett said he’s not sure how the government will handle the situation when the results of the stress tests are released, but he doesn’t think the government should rule out the failure of most of the banks.

Buffett said all but the four biggest banks the government is examining could be sold and should not be considered too big to fail.