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<H2 class=posttitle><SPAN id=ppt1533802><FONT size=3>I'd say Go
Obama</FONT></SPAN></H2>
<H2 class=posttitle><SPAN>Hedge funds become the villains in Chrysler's ongoing
saga</SPAN></H2>
<DIV class=byline><STRONG><A
href="http://www.dailyfinance.com/bloggers/lita-epstein/">Lita
Epstein</A></STRONG><BR>May 1st 2009 at 8:30AM</DIV>
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<P class=filed-under>Filed under: <A
href="http://www.dailyfinance.com/category/company-news/">Company News</A>, <A
href="http://www.dailyfinance.com/category/investing/">Investing</A></P>
<DIV class=postbody id=postbody><IMG alt="" hspace=4
src="http://www.blogcdn.com/www.dailyfinance.com/media/2009/04/handshakea200x150.jpg"
align=right vspace=4>President Obama <A
href="http://www.washingtonpost.com/wp-dyn/content/article/2009/04/30/AR2009043004141.html">clearly
blamed hedge funds</A> for the collapse of the Chrysler deal, which ultimately
forced the company into bankruptcy Thursday. Hedge funds hold about $1 billion
of the automaker's debt, which they bought at deep discounts from other
investors who wanted out.<BR><BR>In his speech Thursday, Obama said, "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. Some
demanded twice the return that other lenders were getting. I don't stand with
them."<BR><BR>As DailyFinance's Peter Cohan wrote yesterday, "Perhaps they
bought General Motors (<A
href="http://finance.aol.com/quotes/general-motors-corporation/gm/nys">GM</A>)
and Chrysler debt in the <A
href="http://www.dailyfinance.com/2009/04/30/hedge-fund-honchos-slash-us-auto-industrys-throat/">open
market at 15 cents on the dollar</A> and are now holding out for, say, an extra
billion -- letting them triple their investment instead of merely doubling
it."<BR><BR>In defense of the hedge funds, one of their attorneys, Ron Geffner,
told the <SPAN style="FONT-STYLE: italic">Washington Post</SPAN>, "I stand with
the fact that we live in a capitalist society where companies who don't modify
their business plans and stay current die and go by the wayside." <BR><BR>That
may be true, but if Chrysler dies, the hedge funds get nothing for their
investment. So where's the logic in this statement? Does he mean the hedge funds
will stand on principal and let Chrysler die, rather than get at least something
for their investment?<BR><BR>Some hedge funds tried for a softer approach at
defending their position. A group of firms that would not identify themselves
put out a statement that said the government "unfairly asked our fund
shareholders to make financial sacrifices greater than those being made by"
other creditors. They are holding back, hoping that the bankruptcy court will
award them more as it discharges the debt.<BR><BR>Sarah Anderson, director of
the Global Economy Project at the Institute for Policy Studies, summed it up
well for the <SPAN style="FONT-STYLE: italic">Post</SPAN>, "It seems rather
short-sighted to risk having the auto sector collapse so that they can get a few
more cents on the dollar for their investors."<BR><BR>While hedge funds try to
make those few extra cents on the dollar, thousands of workers face the prospect
of additional layoffs and the car industry moves just one step closer to
collapse. Where do you stand on this one?<BR></DIV></DIV></FONT><DIV CLASS="aol_ad_footer" ID="13f8935d2ad7747130834d00c527b891"><br/><font style="color:black;font:normal 10pt arial,san-serif;"> <hr style="margin-top:10px"/>Join ChristianMingle.com<sup>®</sup> FREE! Meet Christian Singles in your area. <A HREF=http://pr.atwola.com/promoclk/100126575x1221673648x1201419171/aol?redir=http://www.christianmingle.com/campaign.html%3Fcat%3Dadbuy%26src%3Dplatforma%26adid%3Dfooter:050109%26newurl%3Dreg_path.html>Start now!</A></font></DIV></BODY></HTML>