The Return of Long-Term Capital Management?

Wall Street has a remarkably short memory when it comes to money-management disasters.

Upended a hedge fund? No problem. Had a hand in a blowup that led to a Federal Reserve bailout? No sweat. Put it on your vitae.

Given all the money sloshing around, investors seem almost eager these days to bankroll portfolio managers with less-than-stellar track records.

Eric Rosenfeld, co-founder of Long-Term Capital Management, and two of his former colleagues are starting a quantitative-focused hedge fund, according to a report by Bloomberg.

Remember LTCM?

Founded in part by John Meriwether and a spate of Nobel prize-winning quants, LTCM required a $3.5 billion bailout from Wall Street in 1998 after its currency bets turned sour. The New York Federal Reserve Bank, fearing the hedge fund's demise might send the stock market into a tailspin, orchestrated the loans.

Rosenfeld has shaken off the stigma of the nine-year-old debacle to raise Quantitative Alternatives, based in Rye Brook, N.Y., and is said to be hiring traders to do pretty much the same thing he did at LTCM.

Rosenfeld isn't the only fund manager turning the scarlet letter of investment missteps into a badge of honor.

And these days you don't even have to wait a decade to get back in the game.

As first reported on TheStreet.com, less than a year after taking down hedge fund Amaranth Advisors on wrong-way gas bets, Brian Hunter has hung his own hedge fund shingle, raising somewhere on the order of $800 million. Hunter has named his fund operation Solengo Capital and brought on board some of his partners at Amaranth, including fellow trader Shane Lee.