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Divided We Stand

Divided We Stand
New book about the 2020 election.

Tuesday, May 5, 2009

Hedge Funds and the President

Dow Jones reports:
U.S. President Barack Obama's criticisms of hedge funds last week, after some funds rejected a debt restructuring plan for Chrysler LLC, indicates a nasty fight may be brewing over government plans to regulate the industry. Already this week, an Obama administration official has re-ignited calls for hedge fund regulations, suggesting Obama may still be hot under the collar with regards to these investment pools. ... Obama quickly slammed the lenders who rejected the deal, and unnamed administration officials specifically called out hedge funds as being the ringleaders, and suggested their decision was unpatriotic. The creditors held out for "an unjustified taxpayer-funded bailout," Obama said in an angry tone. "I don't stand with those who held out when everybody else is making sacrifices."
The President did not always have such a strained relationship with hedge fund managers. Check out contribution data at the Center for Responsive Politics. A year ago, as we note in Epic Journey, Andrew Ross Sorkin wrote in the New York Times:

[M]any of the wealthiest hedge fund managers are lining up behind the Obama campaign.Many of the top 10 managers on Alpha magazine's mind-blowing 2007 rich list, which was released last week, have put money on Mr. Obama, according to the Center for Responsive Politics, which tracks campaign contributions. They have each given the maximum donation allowed, $2,300. (Let’s face it, this is pocket lint to these guys.) ...

So why is Mr. Obama such a popular choice among the hedge fund crowd? In a word, access. Unlike Mr. McCain and Mrs. Clinton, Mr. Obama is relatively new to national politics and is therefore open to bringing new people — and new money — into the tent. For money types who want a table, or at least to look involved and get an invitation to the right parties, Mr. Obama is the candidate. As one of the hedge fund managers on the Alpha list said, “To be in Hillary’s inner circle, you had to be giving a decade ago, when Bill was president.” ...

And then there is what some Wall Streeters describe as the “iconoclast thing.” Hedge fund managers like to think of themselves as outsiders with fresh perspectives. The Obama campaign is trying to project a similar image. Mr. Obama might be struggling with the blue-collar vote in Pennsylvania, but he has nailed the hedge fund vote.