Paulson and Pellegrini purchased protection for the riskiest mortgages in the form of credit default swaps, resulting in a $20 billion windfall over 2007 and 2008. George Soros, the veteran hedge-fund investor, placed his own CDS bets, scoring over a billion dollars in profits.3 Baby-faced, thirty-nine-year-old David Einhorn won his own acclaim at a May 2008 industry conference when he accused investment bank Lehman Brothers of using accounting tricks to avoid billions of dollars of real-estate-related losses. Einhorn, who later attributed his success to his “critical thinking skill,” was
...more
