Dems ‘outraged’ by reported hedge fund actions

Democrats on the House Financial Services Committee are “outraged” with a pair of hedge funds that are reportedly flouting the intent of a July law aimed at reducing the foreclosure rate.

{mosads}Rep. Barney Frank, the committee’s chairman, and five other members of the committee have sent a letter to the two hedge funds, Greenwich Financial and Braddock Financial, as well as the Managed Funds Association, to express their disappointment. They’ve also set a hearing for Nov. 12 to haul in executives from the two firms.

Frank and the other members are upset over a report in The New York Times that the hedge funds were telling mortgage companies they work with not to modify distressed mortgages in a way that would hurt their bottom lines. That cuts against a July plan to have mortgage companies renegotiate distressed loans.
 
“We were outraged to read in today’s New York Times that you are actively opposing our efforts to achieve a diminution in foreclosures by voluntary efforts,” the members wrote.

“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,” the members said.

Democrats have been working to rein in hedge funds, which they argue are not under enough regulations. Besides Frank, the Democrats signing the letter were Reps. Paul Kanjorski (Pa.), Carolyn Maloney (N.Y.), Maxine Waters (Calif.), Luis Gutierrez (Ill.) and Melvin Watt (N.C.).

“Your decision is a serious threat to our efforts to respond to the current economic crisis, and we strongly urge you to reverse it,” they said. “Given the importance of this to the economy and to what it means for future regulatory efforts, we have set a hearing for Nov. 12, and we invite you now to testify.

“We believe it is essential for our policymaking function for you to appear at such a hearing, and if this cannot be arranged on a voluntary basis, then we will pursue further steps,” the members said.