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Hedge Funds May Get AIG Cash

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By Barry Ritholtz - March 18th, 2009, 4:02PM


2:45

WSJ, MARCH 18, 2009

Some of the billions of dollars that the U.S. government paid to bail out American International Group Inc. stand to benefit hedge funds that bet on a falling housing market, according to people familiar with the matter and documents reviewed by The Wall Street Journal.

The documents show how Wall Street banks were middlemen in trades with hedge funds and AIG that left the giant insurer holding the bag on billions of dollars of assets tied to souring mortgages. AIG has put in escrow some money for at least one major bank, Deutsche Bank AG, whose hedge-fund clients made bets …

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Category: Bailouts, Derivatives, Video.

Comments

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One Response to “Hedge Funds May Get AIG Cash”

  1. cdskiller Says:
    March 20th, 2009 at 12:52 am

    This isn’t exactly news. I’ve been screaming about this since the first money went to AIG. What IS news, is that major news organizations, like the NY Times, and all of TV, have been suppressing the understanding of the nature credit default swaps, what purpose they served, who purchased them from AIG, et al, and what the sudden, explosive growth in that market from 2005-2007 tells us.
    It tells us that all the major financial institutions here and abroad and a huge segment of the hedge fund community began to realize, in unison, some time in 2004, that the CDO house of cards was very likely to collapse. $60 trillion in credit default hedging rapidly took place.

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