Thursday, 26 May 2016
Last updated 18 hours ago
Oct 27 2008 | 9:24am ET
With opprobrium for hedge funds building and regulatory winds blowing, now would seem a bad time for hedge funds to poke legislators with a stick. But that seems to be the strategy of at least two when it comes to renegotiating trouble mortgages.
A group of Democratic members of Congress blasted hedge fund Greenwich Financial Services and Braddock Financial, which have reportedly threatened banks with legal action if they renegotiate loans that back securities they own, to the detriment of their interests. Other hedge funds reportedly have expressed similar concerns.
That line is striking the wrong kind of chord with lawmakers, who promptly summoned William Frey and Harvey Allon, who head Greenwich Financial and Braddock, respectively, to Capitol Hill to explain themselves.
“For the hedge fund industry, which has flourished for much of the past decade, to take steps so actively in opposition to what is currently in the national interest is deeply troubling,” the lawmakers, including House Financial Services Committee chief Rep. Barney Frank (D-Mass.), wrote to Frey and Allon.
Frank asked the two hedge fund honchos to testify before his committee next week, while also calling on them to voluntarily change their tune and withdraw their opposition to renegotiating the troubled mortgages.