The predators’ subprime ball

Lending money to a subprime mortgage firm teetering on the edge of insolvency sounds like a dumb idea. Yet that’s precisely what San Francisco hedge fund Farallon Capital has done. It’s handed $200m to fellow Californian Accredited Home Lenders. But like some hedge funds that stepped in as purported saviours of ailing dotcoms at the turn of the century, Farallon has the cards stacked in its favour. That might sound odd. After all, Accredited is in pretty poor shape. It probably had about $400m ...