“…I am indeed fearful writing this. It’s really a bad idea to speak out. Angering the President is a mistake…” What country would you expect to hear a citizen make this statement? Venezuela? Cuba? Russia? Nope, those are the words of prominent hedge fund manager Clifford Asness, who wrote a now-famous and widely circulated open letter this week describing the intimidation techniques used by President Obama and his administration.
Why did the President have to resort to such enhanced techniques of intimidation? Mainly because he was asking financial lenders to engage in the same unscrupulous acts his administration has been engaging in since January, i.e. picking winners and losers without concern for free market principles. The President wanted hedge funds to force a loss on investment onto their unknowing clients, so he could reward supportive union bosses in a “controlled” (i.e. Obama controlled) bankruptcy.
Shamefully, only Mr. Asness spoke up, pointing out five economic basics that the President and his advisors should learn:
- “Let’s be clear, it is the job and obligation of all investment managers, including hedge fund managers, to get their clients the most return they can. They are allowed to be charitable with their own money, and many are spectacularly so, but if they give away their clients’ money to share in the ‘sacrifice’, they are stealing.”
- “Clients of hedge funds include, among others, pension funds of all kinds of workers, unionized and not. The managers have a fiduciary obligation to look after their clients’ money as best they can, not to support the President, nor to oppose him, nor otherwise advance their personal political views.”
- “Shaking down lenders for the benefit of political donors is recycled corruption and abuse of power.”
- “…the President screaming that the hedge funds are looking for an unjustified taxpayer-funded bailout is the big lie writ large. Find me a hedge fund that has been bailed out. Find me a hedge fund, even a failed one, that has asked for one. In fact, it was only because hedge funds have not taken government funds that they could stand up to this bullying.”
- And most importantly: “This is America. We have a free enterprise system that has worked spectacularly for us for two hundred plus years. When it fails it fixes itself. Most importantly, it is not an owned lackey of the oval office to be scolded for disobedience by the President.”
But let’s step back away from the principle of this argument, and back to the tactics. Is there ever an excuse for an individual, a business, a bank, or any other organized group to fear the President, his lieutenants or the reach of his power when it comes to his right to free speech or free markets?
Tom Lauria, a prominent bankruptcy attorney, and Democratic Party contributor, recently told WJR in Detroit: “One of my clients was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under threat that the full force of the White House press corps would destroy its reputation if it continued to fight.” Certainly the White House press corps considers themselves independent of any revenge scheme the President may cook up, but then why has their silence on these issues been so loud?
While the left and the right can agree to disagree on certain matters of this bailout, every American should be on one side of this intimidation debate, against what Michael Barone labeled “Gangster Government“. Whether trying to strong arm the dissolution of a company to benefit its union bosses, or trying to use selective declassification of national security memos to prove a policy point, the White House needs to be held to the highest (not higher) standard. The best way to end this cycle of government intimidation is to get government out of these businesses to begin with. Without an end, there shall be no means.