Paulson plans fund to benefit from Wall Street recapitalization


John Paulson, founder of the wildly successful $33 billion Paulson & Co., is planning to begin trading a new fund, possibly as early as the fourth quarter, to profit from the significant recapitalizations of Wall Street banks.

Many major financial institutions, including Citi and Merrill Lynch, are reeling from exposure to the now-defunct subprime mortgage market. Those banks have written off billions of dollars of mortgage-related securities over the past three quarters and have been forced to seek out significant equity infusions to repair their balance sheets.

Paulson’s new vehicle, which investors said is being called Paulson Recovery Fund, is