It seems a little incestuous, but what Mr. Buffett suggests isn't unreasonable (though I'd add that he shouldn't have a unique exemption and Nelson has lost some credibility as the result of the Cornhusker Kickback).
Let's say you took out a mortgage for 95% loan to value a couple years ago. You can still easily afford to make the payments. Now Congress passes a law which requires that no mortgage be allowed to be over 80% LTV -- and enforces it retroactively to existing contracts. You have, let's say, 92% LTV by this time and you have to come up with 12% of the home's value in cash.... or else. That the contract you entered was fully lawful and acceptable at the time it was executed means *nothing* any more. Congress has forcibly changed the terms in a way that is financially disastrous to you (possibly).
Buffett isn't saying these laws are a bad idea moving forward -- but that you shouldn't retroactively add financially punitive terms to existing deals already in place before the law was passed. In criminal law, we have a prohibition against this sort of ex post facto law. And for a similar reason: it's unjust to move the goalposts after the ball has already been kicked.
