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When have hedge funders been bailed out?
by xkjkls 5y ago
When have hedge funders been bailed out?
- the_local_host 5y agoLong Term Capital Management was bailed out. https://en.wikipedia.org/wiki/Long-Term_Capital_Management https://en.wikipedia.org/wiki/Long-Term_Capital_Management
- selectodude 5y agoBy other banks. Not the taxpayer.
- Ericson2314 5y agoStill, ain't like the banks are going to bail out regular people for making some stupid investment.
- mason55 5y agoI'm not sure of the actual point of this whole thread, but regular people make bad investments and get bailed out all the time: it's called bankruptcy.
- Ericson2314 5y agoBankruptcy hurts more because no limited liability. And when the other bailouts are more like "refinancing" as the other reply points out, the institutional bailouts hurt even less.
- xkjkls 5y agoThey do all the time. Every mortgage refinance is a bailout by the same conception that you are using.
- Ericson2314 5y agoThere are refinances but there is also good ol' foreclosure. How many rich financiers have actually "lost everything"? Coperate limited liability + allowed to leverage more + your friendly competitors bail you out is a suspicious combo, even if each of those in isolation is totally fine.
- omgwtfbyobbq 5y agoUnder supervision of the Fed. https://en.wikipedia.org/wiki/Long-Term_Capital_Management https://en.wikipedia.org/wiki/Long-Term_Capital_Management
- cronix 5y agoHow about this? > “This bailout is for the honest, hard-working hedge fund people who should be assured of making money,” said Biden today. > “We spent trillions of taxpayer’s money to bail out giant financial institutions who finally had their irresponsible business practices come back to bite them, and it’s only fair we do the same in this latest crisis.” > “So, it’s only fair that these hedge funds, who once again were more irresponsible with money be helped out by the taxpayer without repercussion.” > Biden revealed that the trillion-dollar package is set to be rolled out in the coming weeks with no demands for greater regulation or change to business practices. https://www.betootaadvocate.com/world-news/democrats-announces-trillion-dollar-bailout-for-hedge-funds-burnt-by-gamestop-financial-crisis/ https://www.betootaadvocate.com/world-news/democrats-announc...
- selectodude 5y agoThat article is what we in the biz call “satire”.
- xadhominemx 5y agoIt wasn’t really bailed out. Equity investors lost all their money. Banks bought the assets at depressed valuations and made enormous profits. Kind of the opposite of a bailout in many ways.
- dangerboysteve 5y agoThere was a great PBS Nova episode on that. Black-Scholes don't fail me know... until it did. No video but a link to the dvd purchase https://www.pbs.org/wgbh/nova/teachers/programs/2704_stockmar.html https://www.pbs.org/wgbh/nova/teachers/programs/2704_stockma...
- canadianfella 5y ago> Black-Scholes don't fail me know... until it did. What does this sentence mean?
- paulpauper 5y agothe investors lost everything. it is like a margin account that goes from +$30k to -$30k. the bailout gets it to zero. investors still losse everything.
- xkjkls 5y agoLTCM wasn't bailed out, all the investors in it got screwed. Banks took 90% control of all of their assets, and the 10% that was left to the original capital managers was still far less than many of the debts accrued.
- xkjkls 5y agoI suppose this really calls into question, what bail out means to you. If we label every private company transaction for a struggling company as a bail out, rather than the traditional one where only ones where the government steps in, then it's almost impossible for anything to not get bailed out.
- turkeytotal 5y agoHappens all the time. e.g. https://www.nytimes.com/2020/07/23/business/economy/hedge-fund-bailout-dodd-frank.html https://www.nytimes.com/2020/07/23/business/economy/hedge-fu...
- valuearb 5y agoDidn’t happen in that article. Fed providing liquidity wasn’t specific to hedge funds at all. “ It remains unclear how big of a role hedge funds played in March’s meltdown — even how many and which funds were involved remains hazy. ”
- turkeytotal 5y agoSpecific or not (yes many different types of institutions can access these markets), hedge funds are known for taking highly leveraged bets with this overnight cash. There is a huge market for sponsored repo trades. Hedge funds were most certainly a part of this problem, and were bailed out.
- endisneigh 5y agoHedge funds are bailed out by banks frequently. Said banks have and continue to receive bailouts funded by the taxpayer. I argue it's basically the same thing, just a step removed. I haven't heard of any hedge fund being given a bailout from the government directly, though.
- xadhominemx 5y agoCan you point to an example of a hedge fund being bailed out by a bank?
- endisneigh 5y agoThe most recent example I can think of is Melvin Capital (a few months ago). They were bailed out by Citadel. Citadel was bailed out by US tax payers in 2009 via AIG. Unfortunately things are very opaque because of the said interconnectedness this article discusses.
- valuearb 5y agoSo you can’t?
- endisneigh 5y agoCan't what?
- wizzwizz4 5y agoPresumably, can't provide an example. You provided an example, so you can't.
- endisneigh 5y agoI honestly don’t follow.