Guardian Unlimited – After being accused of precipitating the present financial crisis by short-selling banks, hedge funds are now turning their attention to student loans.

Jim Chanos, founder and president of Kynikos, one of the best known short- selling hedge funds in the US, has student loan companies high on his list to short for the foreseeable future.

‘This industry has much in common with the sub-prime mortgage industry,’ Chanos said. ‘Things do not look very bright.’

They don’t. More than two-thirds of American university students rely on loans to pay for college, but loan applications are being turned down in record numbers as the near collapse of the credit market is making all but the most secure loans impossible to write.

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Seattle Post- Incriminating messages allegedly sent by two ex-Bear Stearns Cos. hedge fund managers indicted on fraud charges that even sophisticated professionals disregard the dangers of putting sensitive information in e-mails, ex-prosecutors said.

Ralph Cioffi, 52, and Matthew Tannin, 46, were charged last week with misleading investors by saying two funds were thriving while knowing subprime-mortgage investments threatened their collapse. The indictments, the first relating to the subprime crisis, cited e-mails from both business and personal accounts describing looming problems. Investors in the funds ultimately lost $1.6 billion.

"It is pretty dumbfounding that people still use e-mail in such a casual way," said Carol Bruce, a former federal prosecutor now with law firm Bracewell & Giuliani in Washington. "But they do — and they will into the foreseeable future."

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