As we now know, the negotiations between our government, the executives of Chrysler, UAW, banks, bond holders, creditors, suppliers and hedge funds were not successful in their efforts to keep Chrysler from filing for bankruptcy protection. President Obama was clear as to where he put the blame for this failure. Even as negotiations continued, his office put out a statement criticizing the hedge funds for placing their needs above the needs of the group as a whole. In his remarks once the bankruptcy was announced, he reiterated that all parties except the hedge funds were willing to work together and make the concessions to keep Chrysler afloat. It was clear that President Obama felt that these hedge funds were putting their own self-interest ahead of what was best for Chrysler, and ultimately what was best for the country. Although stopping short of naming names, he clearly intended to drive public opinion against them.
It should be clear that it was the executives of Chrysler that steered their ship in to bankruptcy and that this essay only revolves around the recent negotiations looking for a better way out. This discussion serves as both an indictment and reprieve for the hedge funds. Certainly they are guilty of acting in their own self interest and should be condemned for the harm this selfishness will cause, but the question remains: Who was not acting in their own self interest?
The hedge funds calculated that the bankruptcy court was going to give them a better deal than what was being offered in these negotiations. They are in business, not in love, so no matter what the consequences; they say their fiduciary responsibility is to take care of their investors (and themselves). Despite the money that stock and bond holders would lose, jobs that would be lost, retirements that would be redefined and suppliers who would be put out of business; they held their ground. Even pressure from the President had no visible effect. Sorry guys, but it is not my nature to sacrifice for the greater good. I am programmed for self interest. I take care of myself first.
I believe these hedge funds were rightfully condemned for their selfish actions. It demonstrates once again the deplorable state to which business has fallen. A state that defines “doing the right thing”, as any action that increases the bottom line. Consequences to those outside the business are only considered relative to their ability to affect the business.
Although President Obama painted a pretty picture of cooperation and self sacrifice concerning the other parties involved, does this really pass the smell test? Are the hedge funds the only parties in these negotiations acting out of self interest? Hardly, and if we are going to vilify selfish acts, then should we bring all of the guilty to trial. The selfishness of the Chrysler executives is obvious, so let’s start with the UAW. The UAW made concessions for sure, but was it because they wanted to save Chrysler and help the country or just save their jobs? They feared the possible outcomes of the bankruptcy court, so they were willing to make concessions to avoid it. There was no more altruism in their actions than those of the hedge funds.
The banks, bond holders, creditors and suppliers all acted in the same manner. Under the guise of doing what was best for Chrysler and the country they all figured out that getting something was better than nothing. If their due diligence would have indicated to them that a bankruptcy court would have been a better deal, then they would have voted with the hedge funds. Let there be no doubt that everyone involved in these negotiations were looking out for their own self interests. There are no innocent parties.
In the end, don’t we all look after our interests first? If by my family losing $10,000, five others in greater need would gain $50,000, would I give up the $10,000? I am not saying this is a good thing just a natural thing. It is more our nature to take rather than to give. Now having said this does not mean we should not try to rise against our nature and place giving above receiving. It might be the very test our Creator granted our lives to learn. It might be a new paradigm we need to learn quickly.
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