by Peter Latona

Created on: May 18, 2009   Last Updated: May 20, 2009

Shameless Hedge Funds Force Chrysler into Bankruptcy

As we now know, the negotiations between our government, the executives of Chrysler, UAW, banks, bond holders, creditors, suppliers and hedge funds were not successful in their efforts to keep Chrysler from filing for bankruptcy protection. President Obama was clear as to where he put the blame for this failure. Even as negotiations continued, his office put out a statement criticizing the hedge funds for placing their needs above the needs of the group as a whole. In his remarks once the bankruptcy was announced, he reiterated that all parties, except the hedge funds, were willing to work together and make the concessions to keep Chrysler afloat. It was clear that President Obama felt that these hedge funds were putting their own self-interest ahead of what was best for Chrysler, and ultimately what was best for the country. Although stopping short of naming names, he clearly intended to drive public opinion against them.

It should be clear that it was the executives of Chrysler that steered their ship in to bankruptcy and that this essay only revolves around the recent negotiations looking for a better way out. This discussion serves as both an indictment and reprieve for the hedge funds. Certainly they are guilty of acting in their own self interest and should be condemned for the harm this selfishness will cause, but the question remains: Who was not acting in their own self interest?

The hedge funds calculated that the bankruptcy court was going to give them a better deal than what was being offered in these negotiations. They are in business, not in love, so no matter what the consequences; they say their fiduciary responsibility is to take care of their investors (and themselves). Despite the money that stock and bond holders would lose, jobs that would be lost, retirements that would be redefined and suppliers who would be put out of business, they held their ground. Even pressure from the President had no visible effect. Sorry guys, but it is not my nature to sacrifice for the greater good. I am programmed for self interest. I take care of myself first.

I believe these hedge funds were rightfully condemned for their selfish actions. It demonstrates once again the deplorable state to which business has fallen. A state that defines doing the right thing, as any action that increases the bottom line. Consequences to those outside the business are only considered relative to their ability to affect

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