Why governments want to regulate hedge funds?

Discussion in 'Trading' started by crgarcia, May 25, 2007.

  1. They say they want to avoid a financial meltdown a la Long Term Capital Management style.

    But, aren't hedge funds hedged?
    They can sell or even short sell during bear markets.
  2. Look at Amaranth...now think bigger, more leveraged, etc. etc. :D
  3. Hedge funds are big money which means big bribes and backhanders for politicians.
  4. Hedge funds refer to private investment entities such as limited partnerships or LLCs which invest in pretty much everything. Hedge is an old term used when the funds were first created but there is hedging required or mandated and nowadays it is a misnomer.

  5. Why?-----> (1) Politicians, lawyers and lobbyists can get more money from funds by using the "threat" of regulation against them. (2) There is an appearance of greater systemic risk with hedge funds when you consider that most of them are doing the same thing in the same market sectors. If a big shock occurs somewhere, funds can collectively panic at the same time possibly creating a big mess for central banks and the P.P.T. to clean up. (3) Most funds don't hedge. They just have directional bets with varying degrees of leverage. (4) After all is said and done, nothing much should change. We'll see.
  6. Sure it would; it would be more headaches and more expenses for us. Downwith gov't regulation :D