Perhaps the most surprising aspect of Obama’s remarks on the automakers today was how strongly the president blasted the hedge funds who decided not to play ball with the Chrysler rescue plan. The funds, which hold senior debt of Chrysler, argued that their interests were being unfairly subordinated to junior creditors, including the autoworkers union.
Negotiations aimed at preventing a bankruptcy filing fell apart when the funds refused to agree to the Obama administration’s deal and the adminsitration refused to offer them a bigger return. Obama came out swinging hard today. He basically stopped short of calling them un-American.
Here’s the relevant text of Obama’s remarks.
While many stakeholders made sacrifices and worked constructively, I have to tell you some did not. 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. I stand with Chrysler’s employees and their families and communities. I stand with Chrysler’s management, its dealers, and its suppliers. I stand with the millions of Americans who own and want to buy Chrysler cars. I don’t stand with those who held out when everybody else is making sacrifices. And that’s why I’m supporting Chrysler’s plans to use our bankruptcy laws to clear away its remaining obligations so the company can get back on its feet and onto a path of success.