Hedge Fund Corporate Welfare
Last November, Ken Griffin told investors in his Citadel Hedge Funds that they couldn't withdraw their money, but he was still going to charge a 2% management fee on their trapped funds. Oren Kramer a rival hedge fund manager said, "It's like telling someone at a hotel that they can't check out and then charging them for the privilege of staying."
Things were bad for Citadel, but this evening we learned that Ken Griffin isn't really the hyper-capitalist he's always portrayed as--he's just another corporate socialist, passing his losses off on the public. It turns out that $200 million of taxpayer dollars have been turned over to Ken Griffin by AIG for his speculation in Credit Default Swaps. As I said last week, there is no good reason for this to happen.
This is a guy who has been fighting tooth and nail to keep his income from being taxed like the rest of us. So while Griffin finances shills like Grover Norquist to fight for his right to a special tax break, we pay the bills at Citadel.
Uncle Sucker.

















you're links in the last paragraph imply that Griffin is the author or at least mentioned in those articles. His name is not mentioned in either of them.
March 15, 2009 11:10 PM | Reply | Permalink
I, too, checked Taplin's links (before I noticed spiteface's comment).
Taplin makes assertions of fact, not implications. The implication is that the pages he links to offer evidence in support of the assertions. They don't.
A cheap and disingenuous way of making one's argument appear stronger than it is -- sort of like footnotes in Ann Coulter books.
March 16, 2009 4:06 AM | Reply | Permalink
What do you think Taplin is trying to accomplish here? I keep suspecting the guy is talking his book but I can't find his book...
March 16, 2009 10:52 AM | Reply | Permalink
Taplin is speaking on the basis of his own personal knowledge that Ken Griffin funds the efforts to avoid taxing private equity partners and hedge fund managers profits in their own funds as income. The links describe that effort. 1 second on google confirms it.
Griffin is also a big Obama donor and bundler.
Among the group are businessmen such as Kenneth Griffin, a famously private 39-year-old billionaire who threw his support behind Obama's presidential campaign just as he hired a team of lobbyists to urge Congress to preserve a lucrative tax loophole.
http://www.washingtonpost.com/wp-dyn/content/article/2008/04/10/AR2008041004045_pf.html
A Democratic proposal introduced by House Ways and Means Chairman Charles Rangel of New York would more than double the tax rate paid by hedge funds and private-equity firms or their managers. It would tax so-called carried interest -- the share of profits that managers receive for their services -- as wages at rates as high as 37.9 percent, rather than the capital-gains rate of 15 percent. The legislation would cover other types of firms, including commercial real estate and other partnerships.
http://www.bloomberg.com/apps/news?pid=20601103&sid=a4HrSJ5fC0aI
It’s Not the Money, or Is It?
Not that money is the only goal. Mr. Hindery, the cable television entrepreneur, said he would have worked just as hard for a much smaller payoff, and others among the very wealthy agreed. “I worked because I loved what I was doing,” Mr. Weill said, insisting that not until he retired did “I have a chance to sit back and count up what was on the table.” And Kenneth C. Griffin, who received more than $1 billion last year as chairman of a hedge fund, the Citadel Investment Group, declared: “The money is a byproduct of a passionate endeavor.”
Mr. Griffin, 38, argued that those who focus on the money — and there is always a get-rich crowd — “soon discover that wealth is not a particularly satisfying outcome.” His own team at Citadel, he said, “loves the problems they work on and the challenges inherent to their business.”
Mr. Griffin maintained that he has created wealth not just for himself but for many others. “We have helped to create real social value in the U.S. economy,” he said. “We have invested money in countless companies over the years and they have helped countless people.”
The new tycoons oppose raising taxes on their fortunes. Unlike Mr. Crandall, neither Mr. Weill nor Mr. Griffin nor most of the dozen others who were interviewed favor tax rates higher than they are today, although a few would go along with a return to the levels of the Clinton administration. The marginal tax on income then was 39.6 percent, and on capital gains, 20 percent. That was still far below the 70 percent and 39 percent in the late 1970s. Those top rates, in the Bush years, are now 35 percent and 15 percent, respectively.
“The income distribution has to stand,” Mr. Griffin said, adding that by trying to alter it with a more progressive income tax, “you end up in problematic circumstances. In the current world, there will be people who will move from one tax area to another. I am proud to be an American. But if the tax became too high, as a matter of principle I would not be working this hard.”
http://www.nytimes.com/2007/07/15/business/15gilded.html?_r=1&pagewanted=all&oref=slogin
March 16, 2009 5:39 PM | Reply | Permalink
Taplin is speaking on the basis of his own personal knowledge that . . . .
Do you have any evidence in support of this claim of yours?
P.S. How's your choice for Attorney General coming along?
March 17, 2009 12:24 AM | Reply | Permalink
Uh, okay... hedge fund makes bad bet, begs for indulgence. Funny. But that's what AIG did. And Citi. And all the Wall Street banks. Most of the big banks, based on mark to market marks, should be eated by the FDIC. Until they are, all other complaints ring hollow to me. They say the market for their securities isn't functioning. I say it is... just not giving them the prices they want. We need a public reckoning -- depositors first and to the penny, then bond holders, then stock holders. That's it.
March 15, 2009 11:29 PM | Reply | Permalink
You hit the ball out of the park with...
"They say the market for their securities isn't functioning. I say it is... just not giving them the prices they want."
Great comment - keep repeating it as often as possible.
March 15, 2009 11:51 PM | Reply | Permalink
thank god my money is in rental property. otherwise i would be on a jet ski in the hamptons with a 50cal and a good scope.
March 15, 2009 11:53 PM | Reply | Permalink
Well you know we are family here, so we might all be willing to kick in a few bucks. God knows you need the exercise, huh?
March 16, 2009 12:23 AM | Reply | Permalink
. . . $200 million of taxpayer dollars have been turned over to Ken Griffin (sic) by AIG for his (sic) speculation in Credit Default Swaps.
Naming names tells us nothing.
Was Citadel on the hook to someone else? Did it turn the $200 million over to one of its creditors in satisfaction of its obligations to that financial institution?
Bernanke and Geithner have adopted a house-of-cards policy. We've got to follow the money to see whether the Citadel payment isn't just another case of stuffing money into too-big-to-fail financial institutions, again.
It's the policy of pouring money into the "systemically significant" financial institutions we should be attacking.
March 16, 2009 3:43 AM | Reply | Permalink
Originally (a week ago), we thought "our" government had secretly slipped the banks $50 billion.
Now, it looks like they handed then over $90 billion.
March 16, 2009 1:14 PM | Reply | Permalink
According to Bloomberg.com the total's up to $105 billion.
And rising?
March 16, 2009 3:09 PM | Reply | Permalink
As Rick Santelli said ---
President Obama! Are you listening?
March 16, 2009 3:32 PM | Reply | Permalink
Blows my mind. Of course the real danger her is that people stop buying t-bills at low interest rates and we move to inflation financed government spending. And btw, we are rapidly reaching that point - which is what the Chinese expressed concern about last week.
So to summarize, there is a limited amount of cash the government can spend / borrow without inflation. Basic economics tells us that the government should be spending in a way to pump up consumption and to maintain liquidity. We've gone through about $1.5 trillion at this point. Much of it in attempt to create liquidity.
Now, we are learning that the hedge funds are getting large chunks of cash. Maintaining hedge funds does not create liquidity. And hedge funds are owned by rich people who don’t need cash to generate consumption.
We're flushing money down the toilet with the byproduct of inflation.
March 16, 2009 8:49 AM | Reply | Permalink
No more shit-sandwich for me,please I've had enough
March 16, 2009 12:15 PM | Reply | Permalink
Citadel is only one of many many funds that has been halting withdrawals, many while continuing to charge management fees. You can find more about which funds are facing or halting redemptions:
http://hedgefundblogman.blogspot.com/search/label/hedge%20fund%20redemptions
HedgeFundBlogMan
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