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When all the other pillars of capitalism were cracking and tumbling, many would have guessed that high-flying hedge funds would be the next to fall. So why, asks David Ignatius, didn't that happen?

Why is it that the nefarious hedge funds, supposedly the bad boys of the financial world, came through last year's crisis in relatively good shape?

Ignatius offers one theory: unlike AIG, Citigroup, and Bank of America, hedge funds had no net to catch them if they crashed. Far from being reckless, they actually played it safe:

Hedge funds still had to live by the old capitalist rules: There was no lender of last resort to bail them out. So these unregulated managers turned out to be more cautious than the regulated ones.

As Ignatius points out, this offers an important lesson to legislators who are contemplating regulation of the financial sector. The safest gamblers in the stock market are the ones who, like hedge fund managers, are putting their own assets and long-term compensation on the line.

This article is from the archive of our partner The Wire.