The bad news (and losses) keeps piling up for hedge funds. Under the pressure of shareholder redemptions and amidst the chaos in debt and equity markets, hedge funds are being signaled that Uncle Sam likely won't be opening his piggy bank to help them out the same way he has with the banks.
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In an
interview with Bloomberg, Treasury Secretary Henry Paulson
said that the government's bailout program "right now is for banks and
thrifts," indicating that private capital firms such as hedge
funds, buyout shops and venture capitalists shouldn't look for aid from
the government.
Hedge funds are already under tremendous pressure from their own
investors who have been fleeing the vehicles in record numbers. Last
month alone panicked investors took $43 billion out of the asset class.
Things could easily go from bad to worse for the industry, as it's
unclear how much exposure independent hedge funds (the ones not owned
by struggling investment banks) have to mortgage-backed securities, but
there definitely are a number of them that have invested in the class.
-
George White and Ron Orol
