Hedge Funds Federal Reserve

Hedge Funds Federal Reserve

Hedge Funds Benefited From Federal Relief Program

The Federal Reserve released data that reveals several hedge funds benefited from the federal government's emergency rescue program aimed at kick-starting lending amid the recession. The program, the Term Asset-Backed Securities Loan Facility, gave low-cost loans from the Fed to those firms buying bonds backed by "student, auto and commercial-property loans and other assets." Many investors and funds--including those managed by Magnetar Capital, Tricadia Capital and FrontPoint Partners--either directly or indirectly benefited from the taxpayer-funded program intended to help banks move loans off their books.
TALF borrowers also included New York distressed debt investors such as Angelo, Gordon & Co. and Siguler Guff & Co. Pension funds such as the California Public Employees' Retirement System and the municipal pension plan of Milford, Conn., took part, as did scores of little-known funds set up to invest in securities using money from TALF.

John Paulson, whose hedge fund firm Paulson & Co. made large profits betting against subprime mortgages, also was an indirect beneficiary of the government's rescue programs. OneWest Bank, a Pasadena, Calif., bank previously known as IndyMac, which now counts Mr. Paulson and his firm among its private-equity backers, borrowed $34.4 million from TALF in July 2009 to buy securities backed by mortgage-servicing advances, the Fed data show. It repaid the money a few months later.

Magnetar has said it had a neutral view of the housing market. A spokesman said Magnetar participated in the TALF program "on the same terms as the hundreds of other participants" and the program "was a resounding success in providing liquidity to the consumer credit markets." Source

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Tags: hedge funds, federal reserve, federal reserve hedge funds, hedge funds relief, hedge funds TALF, Hedge Funds TALF program, hedge funds Term Asset-Backed Securities Loan Facility

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