Obama Slams Hedge Fund Holdouts on Chrysler Deal

Obama was clearly not happy with certain unnamed hedge funds refusal to make sacrafices prior to Chrysler's "orderly" bankruptcy. Though the President did not name which funds were not cooperative, he noted that the vast majority of financial institutions did come to the table to work constructively. Apparently several hedge funds did not.
Below is a direct quote from President Obama's speech this morning:

"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."

Obama also praised Robert Nardelli, the now former CEO of Chrysler,

"...Chrysler's management, and in particular, its CEO, Robert Nardelli, have played a positive and constructive role throughout this process."

You can also read the entire speech here:

Obama Administration to Introduce Hedge Fund Regulations

It appears the Obama Administration will seek some form of hedge fund regulation this week, though it is unclear how exactly they plan to regulate the 5000 or so US based funds. Obama and Geithner also plan to ann0unce regulations that will force certain derivatives onto exchanges with clearinghouses.

Obama and the Treasury are left with the task of convincing foreign leaders and corporations that the US financial system is still safe despite high profile failures of several hedge funds, and the downfall of some of the US' largest banks and brokerages.

Forcing derivatives including CDOs, CDS, and a whole host of other products onto exchanges would be likley to minimize counterparty risk and might encourage the responsible use of the more levered instruments.