(Some) Hedge fund managers shrugged

Three hedge funds owed money by Chrysler rejected the government’s effort to force them to accept the Chrysler bailout deal. Obama’s furious.

A person at a hedge-fund firm that owns Chrysler loans, speaking anonymously, told Dow Jones Newswires that the difference between what loanholders would get in bankruptcy and out of bankruptcy wasn’t that much, meaning the non-TARP lenders are making a political statement more than anything.

“Are they taking reputational risk for pennies?” asked the person. “Do the math on the recovery levels. It doesn’t make sense for them to have held out for purely economic value.”

Good for them.

3 Comments

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3 responses to “(Some) Hedge fund managers shrugged

  1. anonymous

    Good to see some hedgies remind the community organizer who pays the bills…

  2. Retired IB'er

    This whole situation is pretty amazing, not to mention a tremendous conflict of interest for the government and the TARP banks. The govt seemed to force the TARP banks to accept a lesser outcome, which was to the detriment of the TARP public shareholders. This is exactly why the govt needs to STAY OUT of the private sector.

    What is worse is that the UAW learned a new tactic. Suck the carcass dry and then force bankruptcy and end up with 55% of the new company without any/limited debt. Very, very bad policy by the federal government!

    Finally, the message to bond investors is loud and confusingly clear: invest at your own peril in bonds of companies the US government takes an interest in. Unless of course it is a money center bank (which may be the same thing as saying only buy debt where the Chinese do and you will be protected).

    Can’t see how the unintended consequences of government interference isn’t going to undermine the US financial markets for many years to come. Too much policy driven ends justifies the means for my taste.

  3. anonymous

    When a company borrows secured money, they owe a secured obligation. That is the law. Why is this community organizer trying to bail out union employees who get paid $120,000 a year with no high school degree to make bad cars?