Saturday, January 31, 2009

Fox in the Hen House

From the Financial Times this article... How can the Fed be sure that any hedge fund borrowing money is solvent and will be able to repay? There seems to be no regret to the hedge fund in borrowing money and if plans do not go well going they go out of business. Tax payer pays the build and carries all of the risk....
Hedge funds gain access to $200bn Fed aid

By Krishna Guha in Washington

Published: December 20 2008 05:01 | Last updated: December 20 2008 05:01

Hedge funds will be allowed to borrow from the Federal Reserve for the first time under a landmark $200bn programme intended to support consumer credit.

The Fed said on Friday it would offer low-cost three-year funding to any US company investing in securitised consumer loans under the Term Asset-backed Securities Loan Facility (TALF). This includes hedge funds, which have never been able to borrow from the US central bank before, although the Fed may not permit hedge funds to use offshore vehicles to conduct the transactions.

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