We were getting a bit worried that the apparent silence coming from US officials in the face of calls by various Europeans for international hedge fund regulation was a sign of acquiescence to the terrible idea. Fortunately, Henry Paulson swatted down the talk of hedge funds and private equity as "locusts" in need of international regulations and policing.
U.S. Treasury Secretary Henry Paulson made clear on Saturday that he thinks any risks posed by lightly regulated hedge funds can be handled through market discipline without adding heavy government regulators."Market discipline, focusing on the risk management of regulated counterparties, is the most effective way to address potential systemic risk concerns," Paulson told a news conference at the close of a two-day Group of Seven finance minister's meeting in the German industrial city of Essen.
He said a thriving global hedge fund industry "is in the U.S. interest" and adds liquidity to financial markets.
Paulson tells G7 let markets regulate hedge funds [Reuters via Washington Post]
Posted by Finbar Taggit , Feb 12, 2007 11:41AM
Eureka! The man speaks sense...
Posted by jolly good show, what , Feb 12, 2007 12:06PM
As the clout of the EU, emerging markets, and intergovernmental regulatory bodies grows, voices such as Paulson's increasingly will be drowned out.
Posted by Auto , Feb 12, 2007 12:28PM
Jolly Good Show's right. Whatever you think of Germany's motives and chances of succeeding with hedge find regulation, the Krauts aren't going to roll over just because Paulson tells them to.
If Germany wants to regulate financial firms (whatever kind) operating in Germany, then it will.
Posted by Nick , Feb 16, 2007 10:22AM
New
Posted by Evan Andersen , Feb 26, 2007 6:01PM
I have always taken the view that hedge funds need scrutiny and regulation. It is to the benefit of the consumer that there is full disclosure along the way. Although there are many myths about hedge funds that are not true, like they are full of lofty managers aimed at hurting the economy when if fact they are serving to make it more efficient and stable.
Hedge Funds by name are kind of misleading. I think what needs to happen in American regulation is that we distinguish between what traditionally would be known as hedging, protecting ones capital, and an Investment Fund that takes positions in the markets. It would be nice to have some legislation clarify the difference. They have Investment Funds in Ireland and I think that this is what they should properly be called.
Evan Andersen
Lydia Capital
Posted by Evan Andersen , Apr 10, 2007 5:55PM
I have always taken the view that hedge funds need scrutiny and regulation. It is to the benefit of the consumer that there is full disclosure along the way. Although there are many myths about hedge funds that are not true, like they are full of lofty managers aimed at hurting the economy when if fact they are serving to make it more efficient and stable.
Hedge Funds by name are kind of misleading. I think what needs to happen in American regulation is that we distinguish between what traditionally would be known as hedging, protecting ones capital, and an Investment Fund that takes positions in the markets. It would be nice to have some legislation clarify the difference. They have Investment Funds in Ireland and I think that this is what they should properly be called.
Evan Andersen
Lydia Capital
Posted by oc hedgie , Apr 10, 2007 8:07PM
I would argue, hedge funds are already regulated. It's a myth that they are not. Moreover, it is to the benefit of funds themselves that there is full disclosure. The annual audit can be a challenging ordeal, but having audited results is a big positive. Instititutional investors generally won't even consider funds without them.