Give me a break! These over-leveraged funds, exaggerated prices on the upside, and excaberated prices on the downside. Now the FED is going to allow hedge funds to borrow money under the TALF (Term-Asset Backed Security Loan Facility) so they can leverage their purchases of credit cards, auto loans and student loans under the guise of "arbitrage."
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.
Who knew Bernanke would be the hedge funds prime broker?
The banks rate jacked credit card rates to the taxpayer that bailed them out under the TARP.
Now the Fed lends to the hedge funds to buy the credit card receivables, with a backstop from the taxpayer!