Hedge Fund Titans Support Some Fed Regulation
Seated before Rep. Henry Waxman's (D-Calif.) Oversight committee right now are the very, very, very well-compensated heads of five of the U.S.'s largest hedge funds.
Waxman asked the five: Do unregulated hedge funds pose systemic risk to the economy and should they be regulated?
Score: Four hedge fund chiefs YES, one hedge fund chief NO.
George Soros, chairman of Soros Fund Management (and Democratic activist); John Alfred Paulson, president Paulson & Co.; James Simons, president of Renaissance Technologies and Philip A. Falcone, senior managing partner of Harbinger Capital Partners (which bought its way onto the New York Times Co. board last year) said yes, hedge funds should probably receive some form of regulation.
Only Kenneth C. Griffin, chief executive of Citadel Investment Group said no, arguing that the potential risk posed by hedge funds does not warrant regulation.
"We've gone through a tsunami in the regulated industries -- AIG, Fannie and Freddie, the banks -- and we have not seen hedge funds as a focal point of the carnage," he said.
Griffin did, however, support a notion forwarded by the previous witnesses on Waxman's panel -- that the SEC and maybe the Fed get a chance to look inside hedge funds as a way of seeing early problems before they spread to the outside world.
But such data should not be made public, Griffin said.
"That would be like asking Coca-Cola to disclose its secret formula to the world," he said.
-- Frank Ahrens
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