The following quote is in reference to the Chrysler bankruptcy announcement today:

"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.  I don't stand with them."

President Barack Obama

In my opinion, this quote and the argument underlying it is one of the most irresponsible statements uttered by a U.S. President in my lifetime.

The laundry list of asset managers and hedge funds (including the Oppenheimer mutual fund) which rejected the Government’s Chrysler offer are not attempting to pilfer taxpayer money as portrayed.  These institutions are pools of assets made up of pension funds, retirement funds and personal investments.  Tens of millions of Americans trust their savings, retirements and children’s college funds directly or indirectly to these entities.

The first and primary obligation of each one of these asset managers is a Fidiciary Responsibility to their investors.  It is the professional, ethical and moral duty of asset managers to act solely in the best interests of those investors who have trusted them with the management of their savings.

Obama’s statement dismisses individual property rights, invalidates contract law and flies in the face of a legal system and judicial process specifically designed to mediate conflicts of interest, like this one, through bankruptcy procedures.

Obama is upset that bond holders didn’t swallow an offer that would pay them 33 cents on the dollar and give Chrysler’s ownership to the Government and the Auto Unions.  In a bankruptcy procedure these lenders would be first in line to receive the ownership of or benefits from Chrysler’s reorganization.  It is the opinion of those asset managers that their investors could receive in excess of 65 cents on the dollar in such a restructuring.

If you personally owned a $1,000 Chrysler bond and had the choice between an expected $650 in equity or $333 in cash which would you choose?  Either would be fine.  The point is it is your money and your choice. 

It is not up to the President of the United States to browbeat you or your asset managers into making an ill-advised decision, or to threaten either party when rational self-interest conflicts with his political or social agenda.  Furthermore, it is completely inappropriate for the President to publicly take sides in an ongoing, Federal judiciary procedure.