TAS Trustee Asness Denies Obama the Sanction of the Victim

[Ed Hudgins]

Asness Denies Obama the Sanction of the Victim

May 11, 2009 -- Clifford Asness recently posted an open letter, "Unafraid in Greenwich," in which he attacks the Obama Administration for smashing the basic legal rules that protect creditors and allow for orderly and just bankruptcy proceedings.

In the deals the Administration has brokered for the Chrysler bankruptcy, the creditors get short shrift so that a favorite Democratic donor group, the UAW, can seize control of the company. The deal has been made possible by bullying tactics that use the power of government coercion as the ultimate threat to bring the owners of Chrysler's debt to the table. "When hedge funds, pension funds, mutual funds, and individuals, including very sweet grandmothers, lend their money they expect to get it back.... [but] without [the bankrupcy] recovery process nobody would lend to risky borrowers. Essentially, lenders accept less than shareholders ([which] means bonds return less than stocks) in good times only because they get more than shareholders in bad times."

Asness is managing and founding partner at AQR Capital Management, a notable financial firm. He is also a Trustee of The Atlas Society.

Asness's letter was liberally quoted in the May 11, 2009 Wall Street Journal, in a piece entitled "Hedge Funds Are Piqued by White House." On the CBS News website, writer Declan McCullagh also discussed Asness's views in his piece, "Chrysler Bankruptcy Exposes Dirty Politics." Further, Reuters highlighted Asness in its piece, "Hedge Fund Manager Lashes Back at Obama on Chrysler."

It's a disgrace that most media have been unwilling to talk about how Stephen Rattner, Timothy Geithner, and President Obama are strong-arming the financial sector and riding roughshod over what little remains of property rights in America. We at TAS are proud of Asness's efforts to shed the light of truth and moral indignation on the power grab that the administration is engaged in.

[Michael Stuart Kelly]

Ed,

The only good I see in this is that Mr. Asness will be seen one way in history and President Obama will not.

I know which reputation I would want to have.

Good on Mr. Asness for standing up to the bullying.

Here in the USA, when non-public people like him come out strongly in public on an issue of government policy, knowing full well they are risking their enterprises, the USA has normally gone through some rather brutal changes.

I can't tell if the following quote is tongue-in-cheek, but it caused me to laugh out loud.

Hedge funds really need a community organizer.

The fact that this needed to be said by a person like Mr. Asness is not a good sign for the present administration, as is proper.

May his gesture give courage to others.

Michael