G8

Hedge Funds, Private Equity Under International Pressure

globe1.jpgIt’s no secret that political pressure to regulate some of our more high-flying financiers has been mounting recently. From recent Senate hearings on hedge funds, a Justice Department investigation into private equity club deals, the Connecticut Attorney General’s hedge fund task force, the Connecticut banking regulators new hedge fund unit to legislation recently passed ordering a study into new federal hedge fund regulation, the writing has been on the wall. And hedge funds and private equity shops are starting to respond by forming their own advocacy groups to lobby regulators and lawmakers and launching law suits in US courts.
That’s all well and good. It’s the normal process of American politics. Politicians, regulators and lobbyists were bound to respond to the opportunities presented by events like the Amaranth collapse to enhance their power and prestige. Public ignorance of financial markets and government operations would allow the fear-mongering exploitation by political jobbers. Some of the larger and wealthier financiers would sense an opportunity to burden smaller competition with ungainly regulatory costs. And, of course, enough money is being made in New York and Connecticut that eventually some of it is going to have to get siphoned off to campaign funds and lobbying groups. This is, after all, still a democracy.
But what is the financial community going to do about the new pressure for regulation starting to emerge from international bodies? In the last two-days we’ve heard concerned noises about hedge funds and private equity from both the future head of the G8 economic group—Germany—and the United Nations. As it turns out, in many parts of the world the increase in foreign investment and cross-border deals isn’t seen as universally enhancing efficiency and spreading wealth. In Germany, for instance, private equity shops are affectionately known as “locusts.”
So how do you lobby the G8 or the UN? Where do you go to court to get international regulations overturned on constitutional grounds? Who do you pay off to keep these political jobbers out of your coffers? Does the rise of global finance require the rise of some sort of global governance? There are (or will be) answer to these questions. Answers we all may be discovering soon enough.
Private Equity Has Few Friends Abroad, Report Finds [DealBook]

Germany Wants G8 Summit to Consider Hedge Funds
[DealBook]