Paulson Wants a Say in Hedge Fund Breakdowns

Discussion in 'Wall St. News' started by archon, Jul 23, 2008.

  1. archon


    Paulson Wants a Say in Hedge Fund Breakdowns

    July 23rd, 2008

    New York (HedgeCo.Net) - Treasury Secretary Henry Paulson outlined a plan yesterday that may give some power to the U.S. government when hedge funds come to the end of the road.
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    Paulson said that in the event of trouble, he wanted “"additional powers to manage the resolution, or wind-down, of large non-depository financial institutions, such as larger hedge funds, so as to limit the impact of a failure on the broader financial system."

    Paulson has long been an advocate of tighter hedge fund regulation and an increased authority of the Federal Reserve. He had recently stated that the Fed should have extended control over risky financial instruments such as hedge funds so that they may “intervene to mitigate systemic risk in advance of a crisis.”

    This stance has made him the target of heightened criticism by those who think the government should cease to intervene in times of trouble, referring of course to the Fed backed purchase of Bear Stearns by JPMorgan. Though others say the bank’s demise never would have happened if two of its major hedge funds hadn’t collapsed that past summer. Since massive hedge fund implosions shake the entire economy, Paulson hopes that his plan can provide balance and regulation to quell those instances in the future.

    "Over the last several weeks, the need to move more quickly toward an optimal regulatory structure that establishes a prudential financial regulatory system, focused on promoting long-term market stability has become all the more apparent," he added.

    Though the speech didn’t directly target hedge funds, the rhetoric mirrored the tone of his recent attempts to vamp up regulation of risky investments and to shed light on the often ambiguous industry. He responded to critics saying, “I’m playing the hand I’ve been dealt.”

    Julie Scuderi
    Senior Editor for HedgeCo.Net
  2. retail investors/traders are regulated so what is so special about freakin useless hedge funds in the market in terms of margins and limits on position size etc.

  3. zdreg


    always ask the question how will it help goldman sachs or trading members of the exchange. if u figure it out u will understand paulson's statements.
  4. what the government fails to say is that many of these hedge fund -- not to mention pension funds -- invested in assets they thought were safe and when the payments stopped coming in it triggered massive margin calls that otherwise wouldn't have happened. So, are the hedge funds who were misled about the risk responsible for their failure?

    I'm asking a question and not stating an opinion because I don't know the exact nature of the facts but it seems the blame is grossly misguided.
  5. zdreg


  6. who cares. they should have done all this shit years ago. Its like starting the FDIC in the middle of the 30's. Way too late