Officials Reject More Oversight of Hedge Funds

[The Backlash Cometh]

Officials Reject More Oversight of Hedge Funds
By STEPHEN LABATON
The Bush administration said Thursday that there was no need for greater government oversight of the rapidly growing hedge fund industry and other private investment groups to protect the nation’s financial system.

Instead, the administration, in an agreement it reached with the independent regulatory agencies, announced that investors, hedge fund companies and their lenders could adequately take care of themselves by adhering to a set of nonbinding principles.

The principles, many already being followed by the sharpest investors and best-run companies, say that investors should not take risks they cannot tolerate and should carefully evaluate the strategies and management skills of hedge funds. They also call for funds to make clear and meaningful disclosures to investors.

The decision came after months of study by a presidential working group of top officials and regulators. They looked at both the hedge fund industry, which has more than $1 trillion in assets, and the management of private equity firms, which take direct control and ownership of companies rather than relying on large numbers of outside stockholders.



http://www.nytimes.com/2007/02/23/business/23hedge.html?_r=1&th&emc=th&oref=slogin

[SpiralHawk]

1. "Keep away from our cabal of corrupt cronies." - BushCo republicons

eom

[The Backlash Cometh]

3. That's how I read it.

[Robbien]

2. The "the independent regulatory agencies" are headed by

BushCo henchmen. Of course they say no new regulation is needed. These so called protectors of the public are working night and day to tear down all regulation currently in place.

When only the rich played around in hedges, this non-regulation was not a big deal. Now that many pensions have large investments in hedges, protection from fraud regulation is important. But that is not going to happen until the hedge industry gets its "Enron".

[The Backlash Cometh]

4. Has there been anything deregulated that hasn't fallen to crap?

[Robbien]

6. There is only about three or four trillion dollars involved here

Why would there be a need for any fraud protection. BushCo says it is safe.

People should really take a good look at what their pensions are playing around with.

[AngryAmish]

7. Freight shipping via rails

[The Backlash Cometh]

9. And the rails, are they public or private?

[AngryAmish]

10. Private

Granted there were land grants to form the railroads but most railroads went belly up in the 1800s. However the rates were regulated for a long time. Under Carter it was deregulated. A lot fo folks lost their jobs but the railroads at the time were a bloated mess. Now everything is cheaper and leaner, safety is better than ever and things get around better all around.

[The Backlash Cometh]

11. Well, okay. You win.

1 success against 522 dismal failures.

[depakid]

5. Yet bail outs will always be on the table

Depa waves to Hillary and Bill Clinton...

http://www.geocities.com/eureka/concourse/8751/jurus/hf100203.htm

oh, and lest I forget- also to Joe Lieberman and his wife.

[Cerridwen]

8. Savings and Loan redux?

Didn't the bush family benefit from that fiasco as well?

Yah, don't need no damned regulations. Businesses always look out for their customers. /sarcasm

[AnneD]

15. That's how

I've been reading this. We are in for an even bigger fall this time.

[CRH]

18. Baby Neil if memory serves me ...

with Silverado S&L. But, I'm not sure of the Bush's net profit, as Papa Bush the sitting VP had to somehow get Neil, a get ot of jail free card.

[Cerridwen]

19. Thanks. You're right. There's a link to a list of books about

neil's and the bush admin's role up at the FDIC website under a link titled: Criminal Activity Associated with S&L Failures.

Welcome to DU!

:hi:

[hatrack]

12. Yes, another Long-Term Capital Management could NEVER happen again

Of course, the brilliant economists and mathemeticians of LTCM had it all worked out, and had calculated that their business could not fail within multiple lifetimes of the universe.

But, hey, nothing wrong here that the odd bailout or two for giant banks won't fix, so another round of margaritis, waiter! Let's keep this party going!

[jhasp]

13. You might want to check on the existing regulations on hedge funds before commenting on this

The standards to invest in a hedge fund are pretty high. In order to directly invest in a hedge fund, an investor must have at least $2.5 million in non-real estate assets and a minimum income of $200 thousand per year for the last two years. The thought is that this will eliminate inexperienced investors from taking part and decrease the need for regulation. This is not the same as Savings and Loans, whose depositors consisted of regular folks that didn't have the resources to adequately monitor the S and Ls. Additionally, savings and loans are guaranteed by the government while hedge funds are not.

[The Backlash Cometh]

16. Oh, how I laughed.

"The thought is that this will eliminate inexperienced investors from taking part and decrease the need for regulation."

It wasn't inexperienced investors who Eisenhauer and Roosevelt were warning us about.

[Kelvin Mace]

14. Hmm...

So their choices will be: 1) Gamble with other people's money and make millions of dollars (whether they guess right or wrong) or, 2) "Make clear and meaningful disclosures to investors" which will probably result in investors not letting them gamble with their money so they can make millions of dollars.

Decisions, decisions...

Any bets which way the industry will act?

Here's a prediction: A major hedge fund collapse will cause major damage to the economy on par with, or worse than, the S&L scandal. Lots of hand-wringing and congressional inquiries will ensue, with tons of stories in the newspaper about how failure to properly regulate this "industry" made the collapse inevitable. Major criminal trials will follow, with lots of wrist slaps being handed out. Many members of BushCo will be on the boards of the companies that screwed their investors into the floor boards. While tens of thousands of people will lose their jobs and find themselves reduced to penury, lawyers defending these clowns will make out like bandits, as will the authors of the inevitable "insider tell-all" books that will follow.

Any takers?

[The Backlash Cometh]

17. No, I think that about sums it up.