[LatteLazy]

Am I reading this right?

Brokers hedged their position to reduce the risk of rate rises, and when the Fed came in and helped them out, they're now complaining they can't also claim from the hedge. That's like blaming firemen for putting out your house fire because you now can't claim as much from your insurance.

And some Brokers over-hedged. That's speculation and that's exactly what unsophisticated, under capitalized, unregulated (for this purpose) retail brokers are explicitly banned from doing. So again, what the fuck? They should get margin called all the way to bankruptcy!?

There are a long list of laws dating back centuries about not being able to insure property for more than it's worth. And that's what over hedging is in this case: betting against the very product you create. It needs to be banned. The people doing it need to be prosecuted, not offered sympathy.

[onetimemanytime]

The way I understood it, some benefited but some had already hedged so they got screwed. In essence, the Fed disrupted the normal way of doing things and some bankers will get screwed. Oh well. :)

[verroq]

So the people that hedged their risks lost and the idiots that didn’t get bailed out?

[LatteLazy]

Everyone was bailed out but the fed effectively. The people that hedged end up a little behind, because they paid a premium to be hedged. Such is the joy of fed action: the biggest risk takers profit the most. But no one has lost because of this...

[rv-de]

on financial markets nobody who gambles should get bailed out. future generations of investment bankers would simply price in the bail out. I'm pretty sure they are doing that already.

how risky are you willing bet when you know that you only have to fail really hard to get bailed out?