ProPublica: “Magnetar bet that the housing market would fail”
Magnetar: “We were long the housing market”
In a letter to ProPublica dated 6 April (and available on ProPublica’s website, though none of the commenters on NPR.org seem to have read it), Magnetar wrote:
Magnetar would earn materially more money if these CDOs in aggregate performed well than if these CDOs performed poorly.
On 20 April, ProPublica said that it heard through Bloomberg News about another letter Magnetar wrote, this time to investors. That letter calls ProPublica’s report “blatantly false.”
Further, Magnetar refers to its letter of 6 April thusly:
Despite our best efforts to educate ProPublica’s reporters about the specifics of Magnetar’s Mortgage CDO investment strategy as well as the general process and market circumstances regarding the structuring and issuance of CDOs, ProPublica simply got the story wrong
All the blog comments I’ve read either (a) love that the finger is pointed at rich people, or (b) say that “journalists just don’t understand economics” or finance, which sounds like a blanket pro-capitalist position.
It doesn’t sound like media consumers are really taking either side of the argument seriously. But somebody is lying here.