It all sounds a bit fishy to Fortune. Goldman Sachs trumpeted its hedges in the credit market, which really goosed 3Q earnings. So did Lehman Brothers and Bear Stearns. But as others have noted, no one is exactly sure how the banks actually hedged. Many assume that they made big bets on a decline in the ABX, and Fortune says that the market is liquid enough that this might be true. But the bets seemed to be broader, and that has led people to note that all those winning bets implies some big losers somewhere. Someone had to take the other side of the bets. As usual, the banks themselves are playing their cards close on this one. So we may not ever know. Fortune estimates that Bear Stearns may have made about $500 million on its bets.

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