Posted by Cognito on Tue, May 12 2009

All Posts by Cognito

Obama's Creditor Crunch

The Obama administration’s recent show of force to Chrysler’s creditors has swept the market’s and the media’s attention.Critics of Obama’s tactics are quick to note the waves of uncertainty these actions – calling secured creditors “speculators” and breaching holy grails of capitalism and our market system; due process, capital structure, etc – are sending to private investors, precisely the group the administration has been courting for participation in TALF and PPIP and whose buy-in is necessary to turning the markets.

The fund community, initially taking refuge in anonymity, is becoming more vocal. Managers have become more outspoken on the ramifications of such interference and the MFA and Coalition of Private Investment Companies (CPIC) have met with Geithner.

From a communication perspective, these are necessary and positive steps to establishing dialogue and prevent further derision of the industry. Funds may find it particularly effective to remind the government that “sacrifices” don’t just decrease managers’ income, they ultimately hit the fire fighter and schoolteachers whose pensions invest with hedge funds.

Chrysler, Coalition of Private Investment Companies, Hedge Fund Communications, Hedge Fund PR, Obama,
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