by Tanta on 10/12/2007 01:42:00 PM

Hedge fund fat cats ride to the rescue of beleaguered mortgagors. I might throw up.

Some of you may remember the whoop-de-doo in June of this year, when Paulson got all over Bear Stearns, in the newspapers, for "manipulating" the market by buying delinquent loans out of securities, for the alleged sole purpose of getting out of having to pay out on credit default swaps.

Paulson, having made a fortune on its short subprime trades, is now funneling money to a non-profit which is advocating bankruptcy reform. Says BusinessWeek:

A $20 billion hedge fund may have hit on a unique investment strategy for playing the subprime mortgage bust: fund a consumer-protection group. Paulson & Co., which has seen its assets under management soar this year through fortuitous bets in the subprime market, has given $15 million to the Center for Responsible Lending, a Washington nonprofit that has been lobbying on Capitol Hill for passage of bankruptcy legislation.

Paulson, run by former Bear Stearns (BSC) investment banker John Paulson, stands to rake in a windfall if the measure passes. The key bill, introduced last month, would allow federal judges to restructure mortgage terms and lower payments on the primary homes of borrowers in bankruptcy, a significant legal change. The process, known as a "cram-down" in industry jargon, is opposed by investment banks that trade in mortgage-backed securities. . . .

I propose a moratorium on any Wall Street participant calling any other Wall Street participant a "manipulator."

(Thanks, Brian!)