unlimited hedge fund withdrawals (John Paulson)

John Paulson [no relation to Henry], the very same hedgefund investor who is trying to buy IndyMac said on Bloomberg this morning that hedge fund investors who want to withdraw their funds should be allowed unlimited access to their capital. This is in light of the Madoff scandal and potential changes to regulations to allow them to do so.

He is apparently appearing before Congress to buy troubled mortgage assets and his hedge fund is up by 29% this year. I imagine that Congress and the FDIC will continue to allow anyone who will return the money the FDIC spent to profit from this situation - to the detriment of depositors who have lost funds.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aaiL4CVMbE7s&refer=home

Dec. 31 (Bloomberg) -- John Paulson, who runs the $36 billion hedge-fund firm Paulson & Co., has some harsh words for his peers and their tendency this year to block or curb clients’ attempts to get their money back.
“We think it’s a mistake for managers to use gates and other tools to limit investor access to their funds,” Paulson wrote in a 2009 outlook to investors. “While we recognize the difficulties of the current environment, we think it is a manager’s responsibility to raise liquidity to meet the redemption needs of their investors.. . .

All of Paulson’s funds profited last year buying credit default swaps on mortgage assets, which are instruments that rise in value as the risk of default increases. Paulson told investors in November that he had increased his holdings of derivatives that gain in value when the chances of corporate credit defaults rise.

Paulson’s Advantage Plus fund has climbed 29 percent this year through October while many managers are enduring the worst year of their careers. ”