Magnetar says it was "market neutral," meaning it would make money whether housing rose or fell. Sounds like they were acting as market makers to me. Taking up

Magnetar says it was "market neutral," meaning it would make money whether housing rose or fell. Sounds like they were acting as market makers to me. Taking up risky long positions and hedging with short positions to protect the downside. Sounds like whoever took the risk of the short position misjudged the cost of that risk.