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."

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