Crossposted from Flopping Aces

Just yesterday, I was pondering just what dirt Obama and his auto czar had on Perella-Weinberg/Xerion that could be used to “ruin their reputation” or “embarrass” them.

The only idea I had in the above referenced post was that Xerion also received funds from the New York State Common Retirement Fund, and that perhaps Rattner/Obama admin was using a blackmail tactic by threatening to drag them into the pay-to-play investigation involving Rattner’s Quadrangle, placement agent Henry Morris and former deputy comptroller David Loglisci.

Tom Lauria, a man genuinely indignant at the White House intimidation tactics used against his legal clientele, has now been silenced by Perella-Weinberg themselves.

If P-W insists Lauria dodge the subject, could it be whatever dirt Rattner/Obama have is true, and Lauria’s indignation resulted in shining a spotlight where P-W did not want it to be?

As Lauria says to Fox’s Megyn Kelly,

… I really don’t want to comment, but I’m sure… uh… that… uh… if people keep pressing, the truth is going to come out.

Also:

Hedge Fund Manager Responds to Barack’s Bullying

Kudos to Zero Hedge for posting this commentary written by hedge fund manager, Clifford S. Asness. Major kudos to Mr. Asness for having the heart and courage to stand up for capitalism and free market principles. Asness addresses the implications of President Obama’s browbeating hedge funds’ representation and management of client interests involved in the Chrysler bankruptcy.

Our country was founded on the principles of free speech, fair and equitable trade, property rights, and the ability to operate without intimidation. In writing and publishing this post, Mr. Asness has done our country a great service. I commend him!! I strongly encourage people to share this message with friends and colleagues. Please share your sentiments here as well!! ~LD

Unafraid In Greenwich Connecticut
Clifford S. Asness
Managing and Founding Principal
AQR Capital Management, LLC

The President has just harshly castigated hedge fund managers for being unwilling to take his administration’s bid for their Chrysler bonds. He called them “speculators” who were “refusing to sacrifice like everyone else” and who wanted “to hold out for the prospect of an unjustified taxpayer-funded bailout.”

The responses of hedge fund managers have been, appropriately, outrage, but generally have been anonymous for fear of going on the record against a powerful President (an exception, though still in the form of a “group letter”, was the superb note from “The Committee of Chrysler Non-TARP Lenders” some of the points of which I echo here, and a relatively few firms, like Oppenheimer, that have publicly defended themselves). Furthermore, one by one the managers and banks are said to be caving to the President’s wishes out of justifiable fear.

I run an approximately twenty billion dollar money management firm that offers hedge funds as well as public mutual funds and unhedged traditional investments. My company is not involved in the Chrysler situation, but I am still aghast at the President’s comments (of course these are my own views not those of my company). Furthermore, for some reason I was not born with the common sense to keep it to myself, though my title should more accurately be called “Not Afraid Enough” as I am indeed fearful writing this… It’s really a bad idea to speak out. Angering the President is a mistake and, my views will annoy half my clients. I hope my clients will understand that I’m entitled to my voice and to speak it loudly, just as they are in this great country. I hope they will also like that I do not think I have the right to intentionally “sacrifice” their money without their permission.

Here’s a shock. When hedge funds, pension funds, mutual funds, and individuals, including very sweet grandmothers, lend their money they expect to get it back. However, they know, or should know, they take the risk of not being paid back. But if such a bad event happens it usually does not result in a complete loss. A firm in bankruptcy still has assets. It’s not always a pretty process. Bankruptcy court is about figuring out how to most fairly divvy up the remaining assets based on who is owed what and whose contracts come first. The process already has built-in partial protections for employees and pensions, and can set lenders’ contracts aside in order to help the company survive, all of which are the rules of the game lenders know before they lend. But, without this recovery process nobody would lend to risky borrowers. Essentially, lenders accept less than shareholders (means bonds return less than stocks) in good times only because they get more than shareholders in bad times.

The above is how it works in America, or how it’s supposed to work. The President and his team sought to avoid having Chrysler go through this process, proposing their own plan for re-organizing the company and partially paying off Chrysler’s creditors. Some bond holders thought this plan unfair. Specifically, they thought it unfairly favored the United Auto Workers, and unfairly paid bondholders less than they would get in bankruptcy court. So, they said no to the plan and decided, as is their right, to take their chances in the bankruptcy process. But, as his quotes above show, the President thought they were being unpatriotic or worse.

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. That’s how the system works. If you hired an investment professional and he could preserve more of your money in a financial disaster, but instead he decided to spend it on the UAW so you could “share in the sacrifice”, you would not be happy.

Let’s quickly review a few side issues.

The President’s attempted diktat takes money from bondholders and gives it to a labor union that delivers money and votes for him. Why is he not calling on his party to “sacrifice” some campaign contributions, and votes, for the greater good? Shaking down lenders for the benefit of political donors is recycled corruption and abuse of power.

Let’s also mention only in passing the irony of this same President begging hedge funds to borrow more to purchase other troubled securities. That he expects them to do so when he has already shown what happens if they ask for their money to be repaid fairly would be amusing if not so dangerous. That hedge funds might not participate in these programs because of fear of getting sucked into some toxic demagoguery that ends in arbitrary punishment for trying to work with the Treasury is distressing. Some useful programs, like those designed to help finance consumer loans, won’t work because of this irresponsible hectoring.

Last but not least, 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. The TARP recipients had no choice but to go along. The hedge funds were singled out only because they are unpopular, not because they behaved any differently from any other ethical manager of other people’s money. The President’s comments here are backwards and libelous. Yet, somehow I don’t think the hedge funds will be following ACORN’s lead and trucking in a bunch of paid professional protestors soon. Hedge funds really need a community organizer.

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.

I am ready for my “personalized” tax rate now.

Originally published at No Quarter.

Finally:

Obama Pushing Gun Control Treaty That Takes Oversight Away From Lawmakers

Lou Dobbs had a segment that re-aired yesterday which should scare the crap out of those of you who believe, as I do, that the 2nd Amendment is not a right that can be brushed away so easily…..it’s about CIFTA. A little known treaty that Obama wants ratified that is major….MAJOR gun control:

Alan Corwin has done a great job of detailing the specifics of the treaty:

• EVERY aspect of the treaty introduces major required gun controls, most of which will affect average citizens (as well as the targeted criminal syndicates, dictators and other bad actors).
• The controls go way past anything EVER attempted by gun-control groups in the United States.
• NONE of the proposed gun controls are likely to pass by themselves through Congress. If the treaty is enacted they don’t have to — they become law when the treaty is ratified.
• Virtually NO PROTECTIONS FOR RKBA are to be found, and the wordings are loose enough to allow all sorts of attacks on gun rights American enjoy today.
• The U.S. government under this treaty GAINS POWER to manage firearms almost any way it would like to, without checks and balances.
• Once signed, many of the restrictions and government intrusions become MANDATORY, and the full Congress, already cut out of ratification (only the Senate approves treaties) would be cut out of the implementation process entirely.
• Top to bottom registration of all firearms, ammunition, ammunition components and other related materials is required if they are “in transit” and records must be kept indefinitely. This vague language, and the requirement to comply are a gun-banner’s dream and a rights advocate’s nightmare.
• “Transit licenses or authorizations” for transfers of firearms are required for imported firearms, and loose language could include the same for all domestic firearms.
• Lengthy recordkeeping is required that directly conflicts with U.S. law, and would be left up to bureaucrats and arbitrary controls and implementation.
• Home reloading of ammunition would become illegal and subject to severe sanctions, without government licensing that is undefined and could include almost any conditions, taxes and limitations, including scrupulous inventorying, recordkeeping and unscheduled audit searches of people who reload.
• Similar licensing and controls will be required on anything made “that can be attached to a firearm,” known as “other related materials.” This includes components, parts, replacement parts and such items as wood or composite stocks, slings, bayonets, bayonet lugs, sights, scopes, rails, lasers, grips, flash hiders, suppressors, muzzle brakes and other paraphernalia. Attaching any such parts without a government license would be “illicit manufacture,” a criminal act with undefined penalties.
• Record sharing requirements ensure that any gun-owner data that must be destroyed under current U.S. law can be easily stored abroad, and can be retrieved at will as required under various international “cooperation” clauses.

All this under the guise that guns from our country make up a huge percentage of the weapons used by drug cartels in Mexico…..lies, as Rep. Tancredo pointed out:

The ambassador says Americans are to blame for the violence wrecked on his country by the Mexican drug cartels because “most of the guns confiscated by Mexican police can be traced back to the United States.” That is not true, but the way that claim has been accepted by American politicians and the mainstream media raises suspicions about a hidden agenda.

We can almost forgive the Mexican ambassador for being confused when the United States agency responsible for enforcing our gun laws, the Federal Bureau of Alcohol, Tobacco, Firearms and Explosives, has made so many contradictory statements on the matter. ATFE Assistant Director William Hoover told Congress last year that 90% of the weapons seized in Mexico crime scenes can be traced to gun sales in the US.

The problem is that 90% number isn’t true. Yet, that hasn’t kept it from being picked up and used by members of Congress, Secretary of State Hillary Clinton, and, of course, Mexican officials like Ambassador Sarukhan who are eager to blame the US for Mexico’s problems.

The 90% number reported by Hoover came from a small group of weapons turned over to the U.S. for tracing, but they were by no means all of the weapons seized by Mexican authorities. A spokesman for the ATFE, Matt Allen, has now “clarified” the number and admitted that only 17% of the weapons found at crime scenes in Mexico have been traced to the U.S. Ironically, while Mexican officials have freely used the 90% number from the ATFE, they have not themselves made such a charge based on their own numbers. The truth is, they know better.

Another shredding of our Constitution moment from our President. But wait a minute? A treaty cannot supersede our Constitution right?

Your right……but the way our courts are headed, do you want to trust this will never change? Alan tackles this issue:

Numerous attorneys and others wrote to challenge my position in Page Nine #63 that Mr. Obama’s run-around gun treaty could conveniently bypass the legislative process and the Constitution, like John M. says here:

“While your item in “Page 9″ about Congress and the Obamanation Administration using an Inter-American Treaty on ‘arms trafficking’ to do an end-run around the Second Amendment is certainly scary, I’m not ready to concede (as you appear to do) that a treaty supersedes the Constitution under Article VI.”

He goes on to describe why Art. VI and other safeguards will protect us.

Many people went into greater detail. Cases were cited (Reid v. Covert; Missouri v. Holland; Whitney v. Robinson; Cherokee Tobacco). One high-placed lobbyist felt fairly safe because:

“While an international treaty bypasses House consideration, it requires two-thirds of the Senate for ratification – a tall order even in ObamaNation.”

Other people were less sure, like Chuck G. here:

“I’m still up in the air about it as I’ve heard all my life exactly what you stated.”

I too always heard what he had heard — treaties supersede the Constitution — and always thought it odd. Go read Article VI, cl. 2 yourself. The language is crystalline. One attorney at a high-profile think tank believes:

“The federal government will have arguable legal authority to seize our guns and ammunition if this treaty is signed.”

So…

1. Opinions on the supremacy issue are inconsistent (though often adamant).

2. People who say the treaty won’t be a problem point to a number of SCOTUS decisions, and perhaps stare decisis. Maybe that makes those folks fully comfortable with where Mr. Obama is heading on this. Less so for me.

3. SCOTUS precedents are increasingly ignored by those in power, with groovy rationalizations each time. And SCOTUS decisions have so eviscerated key elements of the Constitution, my faith there is shaken, not stirred.

4. The courts, which should provide more balance, a) don’t, b) are run by the very people they’re supposed to balance, and c) all too often use the completely worthless rational-basis test, knowing it’s worthless, to allow every short-of-insane law to stand.

5. Given a choice of support for gun-rights or outright gun bans, we know which way this administration will go.

6. Four of the current SCOTUS Justices have expressed interest in defining U.S. law from foreign sources, leaving us one vote away from a new understanding of the supremacy clause.

7. Perhaps the biggest issue, though, making all else moot, is that new regs you can easily forecast coming from this treaty will be portrayed as a) required by international law so we’re only doing what’s right, b) required by Article VI however you like to read it, c) consistent with precedent, and most of all, d) not violative of the Second Amendment so no big deal.

After all, if, for instance, every home reloading enthusiast simply has to get a government license, pay an annual tax called a “fee,” pass a test, accept “routine” BATFE searches without notice like FFLs must, and keep detailed records so government can fulfill its obligation to track all guns and ammo, backed up with threats of prison time for paperwork errors or a miscount of a single round, what’s wrong with that?

Besides, you have an attorney general to protect you who’s on record saying a ban on any working firearm in your own home is acceptable under 2A, so, what me worry?

You have a choice: assume the treaty won’t be a problem, the supremacy clause will void any abuse and just let Mr. Obama enact the treaty, or remain a bit more skeptical of this man’s motives. Choose wisely.

Scary scary stuff.