FINalternatives- It’s not the first time “hedge fund” has been used as an epithet, but a former U.S. Treasury chief is using the H.F. words to describe mortgage giants Fannie Mae and Freddie Mac.

The two firms, into which Treasury said yesterday it will inject billions of dollars in loans and investments, have been “arbitraging their lower borrowing costs that came about because of the implied status as government entities,” John Snow, who now serves as chairman of private equity firm Cerberus Capital Management, told Bloomberg News.

“The business model they were using was really the model of a hedge fund,” he added.

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DealBreaker.Com- If your memory stretches past last summer, you might recall that before the current debacle settled on Wall Street there was a lot of sound and fury raised about hedge funds. The rise of hedge funds was said to create systemic risk, where the collapse of one or more hedge funds would somehow topple the financial system.

There were cries of anguish when early attempts to harass and regulate hedge funds were thrown out by the courts. Right up until the mortgage mess began to tear through Wall Street, there were plenty of new schemes being hatched with the aim of tying down hedge funds.

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