Obama Blasts Hedge Funds Over Chrysler Bankruptcy Holdout

Dow Jones Newswire:

WASHINGTON (Dow Jones)--President Barack Obama sharply criticized the hedge funds and other lenders that rejected Chrysler LLC's proposed debt reduction deal, but said the beleaguered auto maker is in position to emerge from bankruptcy in a stronger, more competitive position.

"While many stakeholders made sacrifices and worked constructively, I have to tell you some did not," Obama said Thursday in remarks at the White House. "In particular, a group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout. They were hoping that everybody else would make sacrifices and they would have to make none."

Read the whole story: Dow Jones Newswire

Comments

[leapyearmark]

01:17 PM on 05/18/2009

I quote Cliff Asness (Hedge Fund Manager defending the industry) --> "Managers have a fiduciary obligation to look after their client's money as best they can -- not to support the President, nor to oppose him, nor otherwise advance their political views.....The President's attempted taking $ from bondholders and giving it to a labor union that delivers money and votes for him is bascially shaking down lenders for the benefit of political donors and is recycled corruption and abuse of power."

Well said Cliff.

[jwcnyc]

12:10 AM on 05/13/2009

Let me see if I get this right. The Chrysler “controlled” bankruptcy will ultimately give the UAW 55% ownership and the fully secured bondholders 30%?
OK. So the group that ran the company into the ground gets majority ownership and the fully secured primary lenders get minority ownership.
Oh yeah, that’s right Fiat will save Chrysler by bringing in their poorly built, green minicars.
I’ve got it now. So Chrysler will be saved by Fiat & the union by building poorly built small cars instead of poorly built big cars & SUVS. ….and they will finance this grand turnaround by issuing stock? NOT! Good luck finding someone to underwrite a bond offering now!
Anbody know what price Toyota’s stock is trading at?
COME ON BO. STAND UP TO THE UNIONS!
BE A MAN AND GROW SOME TEABAGS.
BO MUST GO
FROM TEA PARTIES TO CHAMPAGNE BOTTLES, BABY.
SEE YOU IN 2012!

[CynicalSynapse]

07:54 PM on 05/05/2009

Wall Street and its corporate greed created the current economic crisis to begin with, In turn, this pinched consumer credit to near zero, meaning ordinary folk could no longer buy cars. It's not rocket science that this scenario spelled doom for the automotive industry.

I know people who work for Chrysler, and its contractors, so I'm truly saddened by the current turn of events. Irregardless, the situation is the result of hedge funds Oppenheimer Funds, Perella Weinberg Partners, and Stairway Capital. They all thought they were entitled to a bigger return than the banks, such as JP Morgan Chase. The banks held 70% of Chrysler debt, while the hedge funds had only 30% Why should they get more?

As a result, solving the Chrysler financial debacle is complicated by the requirements of bankruptcy court and Chapter 11. I hope the hedge funds end up with nada, zilch, nothing! It would serve them right.

[leapyearmark]

01:03 PM on 05/18/2009

you should rename yourself DelusionalSynapse

[leapyearmark]

01:11 PM on 05/18/2009

you also do not understand math -- it does not matter who held what percentage and it has nothing to do with them getting "more" - just equal percentage payouts in a bankruptcy settlement.

If, for example, the bankruptcy court settled on $.50 on the dollar to senior debt holders it would mean
the banks would $.50 on their $ and the hedge funds would, too. The $ holding may be different, but not the percentage payout. $.50 per dollar either way.

Using your math, if a stock were to pay a special $1 dividend and one person held 1,000,000 shares of the stock and you held 100 shares, you should get less than $1/share vs the the person owning 1,000,000 shares should get? Huh? You would obviously only get $100 as they would get $1,000,000 -- but it is the same rate no matter what.

[research]

06:24 PM on 05/02/2009

The Hedge funds can get more money, from the Taxpayers, by letting bonds fail, then taking the Credit Default Swap insurance.

[mohamedalgore]

03:49 PM on 05/01/2009

now that the union pension has their bailout - where is my bailout

this union bailout has killed my pension as my pension money was in the bondholders - so now my taxes and my pension money goes to bail out the union pension

friggen union thieves

my son bought a toyota this morning (the first non-American car in my family of 32 total cars over 25 years) and I assure you that (unless it is a ford) my 27th personal car will not be American

good job obama - you take my taxes, my pension and now my desire to buy American cars

[research]

10:04 PM on 05/01/2009

Why do you hate unions? They didn't run the car companies. They didn't fail to invest the health retirement funds wisely, they just did their jibs, building the cars that management had designed.

[steelmill]

10:18 PM on 05/01/2009

Ford is union also

[cjt1957]

01:49 PM on 05/01/2009

With 55% ownership in the UAW's hands they will fail. The Union took them to this point. It may bring Fiat down as it did Damelier...

[research]

02:20 PM on 05/01/2009

Worked for Harley.

[steelmill]

08:22 PM on 05/01/2009

The union didn't control the money or make the decisions

[blueskybigstar]

10:14 AM on 05/01/2009

Since so much of the economic problem was caused by hedging, it only makes sense to hedge the bailout. Bailout everybody and cap the maximum.

[SangZe]

07:38 AM on 05/01/2009

Oh, wow, Obama criticizes the financial guys - but they just laugh it off as they walk over him. They know who owns the government, and it ain't him (or us, either).

[leapyearmark]

01:19 PM on 05/18/2009

I quote Cliff Asness (Hedge Fund Manager defending the industry) --> "Managers have a fiduciary obligation to look after their client's money as best they can -- not to support the President, nor to oppose him, nor otherwise advance their political views.....The President's attempted taking $ from bondholders and giving it to a labor union that delivers money and votes for him is bascially shaking down lenders for the benefit of political donors and is recycled corruption and abuse of power."

Well said Cliff.

[Bytown]

07:15 AM on 05/01/2009

Funny how the US criticized Castro, Chavez and others who nationalize companies and don't pay the previous owners fair compensation for those assets but suddenly Obama is doing the same thing and THEY are the bad guys. Government Hypocrites!

[ibsteve2u]

03:25 AM on 05/01/2009

Now that you're good and mad, Obama, how about investigating the role the hedge funds played in jacking up energy prices?

Seeing as that was the straw that broke the economy's back...

[lvdragonlady]

02:57 AM on 05/01/2009

Any excuse to justify why they did not step up and help out when they could have.

[cjt1957]

01:44 PM on 05/01/2009

The government comes in and invests less and gets a better return rate. Why did the government not want to take the same terms they want to force on MIllions of investors?

[steelmill]

02:38 AM on 05/01/2009

Don't know much about hedge funds,so I thought I'd check it out on the internet,what I found is that you have to have a $1 million or more of an initial investment and isn't regulated and is for wealthy investors and corporations,but on the other hand I heard it was used to invest for pensions,so I'm not sure about this.

[oneblackvote]

01:01 AM on 05/01/2009

I don't see any California Democrats on the above list. They know better. They would pay dearly in the next election, We don't play in California.

[rich misty]

12:50 AM on 05/01/2009

Obama did the right thing calling their bluff. Under the circumstances, I would like a Judge overseeing this reorganization.

[cjt1957]

01:45 PM on 05/01/2009

This does go before a judge. Lets hope he will do the right thing because Obama will not...

[leapyearmark]

01:21 PM on 05/18/2009

any fairminded judge will give them equal share to ALL Senior debt holders no matter how big or small and in what form.

[MikeOptv2]

12:40 AM on 05/01/2009

Fact is Obama is right and the hedge funds and investment firms are wrong. Don't even attempt to sugar coat this.

They got greedy. The reason they didn't agree to the deal is PRECISELY because they wanted tax payer dollars.

[Faraja]

07:46 AM on 05/01/2009

Obama is wrong on this one! Those four banks agreed to that stupid deal because they took TARP money. But for Hedge Funds, its all about the Benjamins baby!

[cjt1957]

01:47 PM on 05/01/2009

These funds include retirement investments from firefighters, teachers, police... These people are tax payers and voters too. Obama may have just lost 2012....