Some hedge funds that bet on a falling US housing market could benefit from emergency funds the US government paid to bail out AIG, reports the WSJ, citing documents that show how Wall Street banks were middlemen in trades with hedge funds and AIG that left the insurer holding the bag on billions of dollars of assets tied to souring mortgages. AIG has put in escrow some money for at least one major bank, Deutsche Bank, whose hedge-fund clients made bets against the housing market. The money will be released if mortgage defaults rise above a certain level.

This entry was posted by Gwen Robinson on Wednesday, March 18th, 2009 at 5:10 and is filed under Capital markets, Hedge funds. Tagged with aig, deutsche bank. Edit this entry.