Warren Asks: Argentina Bailout for Economy or Hedge Fund Gains?

Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, has requested information from the Managed Funds Association (MFA) regarding its potential role in the Trump administration's financial support for Argentina, a country with a history of economic instability. In a letter to MFA CEO Bryan Corbett, Warren sought details about the group's lobbying efforts and communications with the Treasury Department during the deliberations over a $20 billion currency swap framework and peso purchases announced by Treasury Secretary Scott Bessent on Sept. 22. The package, aimed at stabilizing Argentina's financial markets amid a crisis, has drawn scrutiny over its potential to benefit hedge fund investors rather than address the nation's systemic economic challenges.

The U.S. intervention, which includes direct purchases of Argentine pesos and a swap line with the central bank, was framed by Bessent as a necessary step to prevent a broader regional contagion. "The U.S. Treasury is prepared to take whatever exceptional measures are warranted to provide stability to markets," Bessent stated in a social media post. The move pushed Argentina's 2035 bond up 4.6 cents to 60.58 cents on the dollar and lifted the peso by 0.8% on the day. However, Warren has questioned the scale and conditionality of the support, arguing that the $20 billion may not address Argentina's long-term fiscal issues but could allow hedge funds to exit positions without losses.

Warren's inquiry is tied to broader concerns about the political motivations behind the bailout. The timing of the support-weeks before Argentina's Oct. 26 midterm elections-has raised eyebrows, as President Javier Milei's party seeks to solidify its legislative majority to advance austerity measures. Bessent described Argentina as a "systemically important U.S. ally in Latin America," though critics argue the nation's economic turmoil has minimal direct impact on U.S. interests. Warren's letter also references a potential conflict of interest, given Bessent's prior professional ties to hedge fund manager Rob Citrone, who has heavily invested in Argentina. Citrone's firm, Discovery Capital Management, has not disclosed the extent of its Argentine holdings but has seen significant returns since Milei's reforms began.

The MFA has yet to respond to Warren's request, which also includes demands for communications between the association and its members regarding Argentina investments. Warren's office has emphasized that the legislation she introduced would restrict the Trump administration's use of the Treasury's Exchange Stabilization Fund (ESF) for Argentina-related support. The bill would terminate any financial contracts entered into before its enactment within seven days of passage, a provision designed to curb future interventions. Lawmakers plan to use a Senate unanimous consent process to expedite a vote on the measure.

While the U.S. Treasury has declined to specify the amount of pesos purchased or the swap line's structure, the intervention has been welcomed by market analysts. Eduardo Ordonez Bueso of BankInvest noted that the lack of concrete details prior to the announcement had fueled fears of a "complete collapse" of Argentina's economy. Jim Craige of Stone Harbor Investment Partners praised the Treasury's direct purchase of pesos as a "surprising but welcome" move to stabilize valuations. However, critics warn that propping up the peso with foreign currency inflows risks triggering capital flight, as wealthy Argentines convert assets to dollars and transfer them abroad.

The political implications of the bailout extend beyond economic policy. Citrone and other right-wing allies have been closely involved in securing U.S. and IMF support for Milei's government. Tactic Global, a lobbying firm founded by former CPAC officials, has represented Argentina as a foreign agent since February 2025 and facilitated high-profile meetings between Citrone, Bessent, and Milei. The group's ties to U.S. intelligence and its role in promoting the bailout on social media have further complicated the narrative around the rescue package.

Source: [1] Fortune (https://fortune.com/2025/10/09/warren-hedge-funds-bessent-argentina-bailout-milei/) [2] U.S. Senate Banking Committee (https://www.banking.senate.gov/newsroom/minority/warren-presses-treasury-secretary-bessent-on-trumps-argentina-bailout) [3] Mother Jones (https://www.motherjones.com/politics/2025/09/trump-argentina-bailout-hedge-fund-billionaire-rob-citrone-scott-bessent/) [4] CNBC (https://www.cnbc.com/2025/10/09/us-buys-argentine-pesos-agrees-to-20-billion-swap-line-bessent-says.html?msockid=19ae013bffe364812d0017bbfe2d6593)