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Bloomberg – Regulating hedge funds is one thing. Shackling them is another.
It’s difficult to tell which one is the ultimate objective of authorities in the U.S. and Europe as they push for greater oversight of these alternative investment managers.
There are reasons to worry officials will opt for whips and chains.
President Barack Obama last week showed why. Speaking of Chrysler LLC’s bankruptcy filing, he heaped blame on “a group of investment firms and hedge funds.” The funds, the president said, had refused to put wider government and auto-industry interests ahead of their own.
President Obama’s harsh attack on hedge funds he blamed for forcing Chrysler into bankruptcy yesterday sparked cries of protest from the secretive financial firms that hold about $1 billion of the automaker’s debt.
Hedge funds and investment managers were irate at Obama’s description of them as "speculators" who were "refusing to sacrifice like everyone else" and who wanted "to hold out for the prospect of an unjustified taxpayer-funded bailout."
"Some of the characterizations that were used today to refer to us as speculators or to say we’re looking for a bailout is really unfair," said one executive who spoke on condition of anonymity because of the sensitivity of the matter. "What we’re looking for is a reasonable payout on the value of the debt . . . more in line with what unions and Fiat were getting."
Reuters – The U.S. Treasury raised its offer by $250 million (168.9 million pounds) in debt restructuring talks with Chrysler lenders on Wednesday as part of a final push to win over lenders holding out for better terms and avoid bankruptcy, two people person briefed on the closed-door talks said.
The lenders had until 6 p.m. ET to vote on the offer, which was made late Wednesday afternoon, one of the sources said.
Herald Tribune – The Treasury Department has increased its offer to repay Chrysler’s senior lenders as part of continuing talks on how to reduce the company’s debt, a person who had been briefed on the talks said on Wednesday.
The government’s new plan, however, still shows a broad chasm between the two sides as Chrysler races to complete a reorganization plan by April 30 or face a near-certain liquidation through bankruptcy.
Daily Times – Banks and hedge funds that hold $6.9 billion in Chrysler LLC debt have proposed forgiving $2.5 billion of it in exchange for about a 40 percent stake a Chrysler-Fiat alliance, according to two people briefed on the proposal.
One of the people said the lenders delivered their counterproposal to Chrysler and the U.S. Treasury Department late Monday night. Neither person wanted to be identified because the negotiations are private.
Cape Cod Times – General Motors Corp. could get as much as $5 billion more in federal loans, while Chrysler LLC could get $500 million as they race against government-imposed deadlines to restructure, according to a government report filed yesterday.The quarterly report by a special inspector general on the auto industry and bank bailout programs says the money will be made available for working capital. GM has until June 1 to complete restructuring plans that satisfy the government’s auto task force, while Chrysler has until April 30
Traverse City Record Eagle – General Motors and Chrysler, which have received $17.4 billion in federal aid and face upcoming deadlines to restructure their companies, will designate the auto parts suppliers that need the financing, giving them a large role in determining which suppliers will survive. Ford Motor Co., which has not sought the government aid, has said it does not intend to use the program.
The White House sent a team of 15 people to Detroit on Wednesday to work with GM over the next two weeks to accelerate the restructuring process, an administration official said.
CNNMoney.com – General Motors and Chrysler LLC have about a week or less before they find out if they’ll get the additional help they need from taxpayers, creditors and unions to avoid bankruptcy.
What they already know is that any assistance they receive won’t be given happily.
The two companies face a March 31 deadline to win concessions from bondholders and unions in order to prove to the Treasury Department that they can be viable in the long term. Without such a finding, the government can recall the $13.4 billion it has already lent to GM (GM, Fortune 500) and the $4 billion it loaned to Chrysler.
Few expect Treasury to take such a drastic step.Still, it’s clear that the automakers need more than the loans they already have received. Chrysler is on record as saying it needs as much as $5 billion in additional funds by March 31 to avoid being forced into bankruptcy.
Reuters – President George W. Bush said on Monday an announcement on a auto industry rescue was not imminent, leaving the industry’s fate clouded in uncertainty for a little longer.
"We’re not quite ready to announce that yet," Bush told reporters on Air Force One during a flight from Baghdad on an unannounced visit to Afghanistan.
He had been asked when he might make an anticipated announcement about tapping a $700 billion financial industry bailout fund to aid General Motors Corp, Ford Motor Co and Chrysler LLC.
Asked whether he was leaning toward using financial bailout funds, Bush said: "I signaled that that’s a possibility."
Los Angeles Times – Financial giants and other large firms now being bailed out by the government spent millions underwriting the Democratic and Republican conventions last summer, just weeks before coming to Washington seeking multibillion-dollar handouts.
The big donors included AIG, Ford Motor Co., Citigroup, Goldman Sachs and Freddie Mac.
In all, major corporations, labor unions and individual millionaires poured $118 million into the nominating conventions for Barack Obama and John McCain, according to reports from the Campaign Finance Institute and the Center for Responsive Politics. The nonpartisan private groups compiled the numbers from filings required under federal law.
Reuters – General Motors Corp and Chrysler LLC are considering accepting a pre-arranged bankruptcy as the last-resort price of getting a multi billion dollar government bailout, Bloomberg reported, citing a person familiar with internal discussions.
In response to automakers’ bailout plea, staff for three members of Congress have asked restructuring experts if a pre-arranged bankruptcy — negotiated with workers, creditors and lenders — could be used to reorganize the sector without liquidation, Bloomberg said.
General Motors and Chrysler could not be immediately reached for comment by Reuters.
Industry executives and analysts say the immediate carnage from a bankruptcy of General Motors Corp, Ford Motor Co or Chrysler would spread throughout an industry that is bleeding cash in a global slowdown.
