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George Soros, chairman of Soros Fund Management, listens during a debate at the World Economic Forum in January 2008. - 


TESS VIGELAND: Today's Wall Street Journal reports that when Merrill Lynch posts its earnings tomorrow, it'll be kissing another $6 to $8 billion goodbye. Speaking of billions, that's what the new kings on Wall Street, hedge fund managers, raked in last year. A new survey released today shows that the top five made more than $1 billion each, even as the housing and credit markets fell down the rabbit hole.

Jill Barshay reports.

JILL BARSHAY: The man who made the most money last year is John Paulson, $3.7 billion. That's according to Institutional Investor's Alpha Magazine, which ranked the top hedge fund managers in the country today. Editor Michael Peltz says it's the largest payout in modern history.

MICHAEL PELTZ: We've got five guys on our list that in one year alone made enough to have purchased Bear Stearns. I mean to us that sort of says a lot, I mean just, you know, the enormity of the wealth that the hedge fund managers today are generating.

Paulson made his money investing in complex bets against the subprime mortgage market. When these mortgages defaulted last year, Paulson's funds rose as much as 600 percent, and like most hedge fund managers, he pocketed 20 percent of that. Paul Dorf, at Compensation Resources, endorses multimillion dollar packages for corporate executives, but billions makes even him outraged.

PAUL DORF: It doesn't look kosher, particularly if you dig into what they're making their money on.

He says most of the funds making huge profits . . .

DORF: Are betting on commodity prices for oil, the fact that banks are going to fail.

Paulson's investors might not agree. The pension funds, endowments and wealthy investors who entrusted their money to Paulson appear to have gained about $15 billion for themselves, too.

In New York, I'm Jill Barshay for Marketplace.