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Congress Tries to Strong Arm Hedge Funds

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Thread Starter
Elite Member
Aug 14, 2007
Professional Status
Certified Residential Appraiser
More than a few hedge funds have gone public in recent days with their opposition to proposed loan modifications, which they say would hurt their investments.

Barney Frank (D-MA), expressed “outrage” that investors would not back the government’s plan to refinance troubled homeowners into government-insured mortgages – after a substantial *haircut* provided by the Feds.

“We were outraged to read that two hedge funds, Greenwich Financial Services and Braddock Financial Corporation, are instructing the servicers of their mortgages to defy this national program and to insist on further socially and economically damaging foreclosures,” said Frank. “We believe the law clearly allows for modification where such changes would involve a lesser loss than foreclosure, and the benefits to the whole economy of such an approach are obvious.”

“For hedge funds, which have been the beneficiary of a lack of regulations and a very permissive attitude, now to put obstacles in the way of this important national policy is intolerable. We have written to these two hedge funds and to the Managed Funds Association as well, strongly urging them to reverse this policy which will have such negative impacts on the economy.”

Barney Frank said his committee will have a hearing 11/12/08, and wants the managers from Greenwich and Braddock to attend.

“If we are not able to get voluntary attendance, then we will pursue steps to compel them,” Frank warned.

The lawmakers threatened “serious implications for the rules” governing hedge fund operations in the future should the funds maintain “this posture of obstruction.”

Hedge Fund managers say: “We’re going to have to tackle abrogation of contracts, address the issue of the sanctity of contracts, because what Frank et al want done here is for hedge funds to act contrary to their investors’ best interests, which carries legal liability as well. And that’s an issue that goes well beyond the current crisis.”


You can draw your own conclusions, to me, it looks like the rule of law
is being tossed directly into the circular file.
Well, it was nice living in a relatively free and democratic society.
Wonder where I can move to find something like it.

Randolph Kinney

Elite Member
Apr 7, 2005
Professional Status
Retired Appraiser
North Carolina
Mr. Frank has a different way at looking at private parties and contracts.

If Mr. Frank and his beliefs are to be law, then he should be held accountable for the outcome. He won't be, however, the affects will be long lasting even when the laws are undone.

It is going to be a wonderful experience going forward. The poor may well receive more benefits at the expense of the wealthy. But it won't last. The concept of taking from the few to benefit the many has historically failed.

Terrel L. Shields

Elite Member
Gold Supporting Member
May 2, 2002
Professional Status
Certified General Appraiser
This is a confiscatory policy, nothing more. If not voluntary then how does that differ from the Chinese or Russian model. Like when Putin jailed the CEO of an oil company, the courts declared them to owe huge taxes, and then they bought the company for less than the tax bill....nationalized.
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