According to the annual pay survey done by AR: Absolute Return+Alpha magazine and reviewed by The New York Times, the top 25 hedge fund managers made $25.3 billion in 2009.

David Tepper was at the top of the list with a $4 billion pay day. His main fund was up 130% last year. Hedge fund legend George Soros made $3.3 billion, adding to a string of unprecedented good years. Carl Icahn, a perennial member of the group made $1.3 billion. Other big players where back as well, including Steven Cohen, who runs huge fund SAIC and Eddie Lampert, the man who bought a controlling interest in Sears (SHLD) and nearly brought the company to its knees through a series of bad decisions.

The news will likely rattle Washington which has tried to create the image, especially The White House and Democratic lawmakers, that big pay on Wall St. must be vanquished.

Washington’s problem is that, unlike many bank and investment bank CEOs, whose firms received huge sums of money from the TARP to survive and who otherwise  might have no jobs at all, the hedge fund managers are beholden to no one other than their own investors. These investment groups are usually made up small groups of sophisticated institutional investors.

A hedge fund manager can lose in one year what he made in the year before. Hundreds of hedge funds closed in 2009, so the risks of running the funds can be extraordinary.

The one move that Washington can do to keep hedge fund management under control is to cap the lending that large banks make to funds that allow them to leverage their bets. These loans are often risky, but they are also often profitable to the institutional divisions of the bank, and curbing them could cost banks money at the bottom line.

For now at least, capitalism has its day in the sun, a day when an individual can make $1 billion and not be bothered by any public shareholders, the government pay czar, or anyone in Washington who is unhappy about the situation.

Douglas A. McIntyre

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