Tuesday, November 18, 2008

Paulson Hedge Fund Buys Into Mortgage Securities

John Paulson, the hedge fund manager (not to be confused with Treasury Secretary Henry Paulson), who was called before Congress last week to discuss the huge profits ($3.7 billion) he made by foreseeing the collapse of the subprime mortgage market and shortng mortgage backed securities, has started to buy securities backed by residential mortgages.

US residential mortgage securities fell in value last week after Hank Paulson, Treasury secretary, said that the federal government had decided against buying toxic assets as part of its $700bn troubled asset relief program.

Paulson has told his investors that he started buying troubled mortgage-backed securities at the end of last week, hoping to capitalise on price falls that followed the Treasury announcement,according to FT.

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