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The New Bankers
Hedge funds have what many banks are lacking these days: liquidity. Once considered a last resort for troubled companies, hedge funds have stepped into the breach as financiers even for large and stable companies because commercial and investment banks aren't lending like they used to. "We pride ourselves on being able to provide a SWAT team with all available resources," says Richard Ronzetti of New York's Marathon Asset Management.

For years E*Trade Financial Corp. invested a good chunk of its capital in collateralized debt obligations. It seemed like a great way for the online brokerage firm to generate balance-sheet gains: Interest rates were falling and real estate prices were rising, driving up CDO values. But when the real estate
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