The Audit can’t resist the two-column, paper-leading story (badly underplayed on the Web) by Saskia Scholtes, who got hold of a letter from a hedge fund group complaining to a trade association that banks are doing too much to keep subprime borrowers from default.

Why hedge funds care is well-explained, and I’ll get to it. But it takes a very smart newspaper to find this particular letter, figure out its bigger meaning, and explain it in twenty inches, without a jump inside:

Hedge funds are attacking bank decisions that help delinquent US mortgage borrowers remain in their homes in a move that pits some of the country’s richest people against its least well-off.

And to solidify the point:

The controversy pits hedge fund interests against those of stretched US mortgage borrowers and politicians who want to help them keep their homes, underscoring the political dilemmas created by the growth of the mortgage bond market.

Making the story particularly laudable is that it deals with derivatives, which, I don’t care what anybody says, are complicated.

It seems that hedge funds, through derivatives, have bet big on defaults by subprime borrowers. Banks, who would lose in that scenario, are relaxing lending terms (lowering rates, etc.) to keep such defaults from happening.

Twenty five of the hedge-fund whiners wrote a letter to the International Swaps and Derivatives Association to act on the so-called problem, according to the letter nailed by the FT.

“ISDA should actively promote an industry solution that assures market participants that no one can engage in practices that are manipulative and prohibited by existing securities laws,” the funds said. ISDA declined to comment.

The Audit says: Boo hoo.

Looking bad here is the group’s leader, Paulson & Co., a heretofore unknown (to The Audit) hedge fund, which is up “up more than 90 percent in the year to date.” Audit fans, year to date means: 90 percent since January. They are looking at a 180 percent return year. Banks are paying 5% on a certificate of deposit.

Are they kidding?

Paulson, whoever they are, didn’t comment. But some unnamed hedge funder did:

One member of the group that wrote to ISDA said the hedge funds were not trying to force subprime borrowers from their homes – just to make sure that banks were keeping the interests of their trading desks and their mortgage arms separate.

Oh, I see. It’s about market integrity or something. Thanks for the not-for-attribution explanation, whoever you are.

And thanks, Saskia and all the Brits for making The Audit’s Friday. Good show, old beans! This calls for a Pimm’s, with extra cucumber.

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Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.