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More On Magnetar

A Senate report has some new details on a hedge fund called Magnetar.

Magnetar was the subject of a This American Life story we did last year with ProPublica, an investigative reporting outfit. (You may remember the show tune — "Bet Against the American Dream" — that aired along with the story.)

Here's the latest update from ProPublica:

A bipartisan report by the U.S. Senate's Permanent Subcommittee on Investigations adds new detail on the activities of the hedge fund Magnetar and its role in helping to create more than $40 billion in mortgage-backed securities, most of which failed disastrously. ...

The Senate report quotes candid emails from a Deutsche Bank official, Greg Lippmann, discussing Magnetar's strategy. "[T]hey [Magnetar] want to short the market and are willing to pay the freight," Lippman wrote to a colleague in late September 2006.

In another email, Lippmann explains how Magnetar was willing to buy the risky and difficult-to-sell bottom part of collateralized debt obligations in order to bet against the parts higher up in the capital structure, describing its strategy as "a bit devious."

Read the whole post at propublica.org.

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