Hedge Funds Federal Reserve
Hedge Funds Benefited From Federal Relief Program
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