Virtual Hedge Funds
Hedge funds have been described as financial "weapons of mass destruction" by investment guru Warren Buffet. There are an estimated 8,000 hedge funds with over two trillion dollars of assets under management with no government oversight, supervision or guarantees should the funds start melting away in the subprime wake.
Their oversight, risk management and transparency is mandatory to prevent another multi-trillion financial industry meltdown. The voluntary guidelines under which hedge funds currently operate are no longer acceptable in light of what we have learned from the subprime crisis.
In 2007, a presidential working group headed by Treasury Secretary Henry M. Paulson Jr. rejected the idea that the funds needed increased regulation. The voluntary guidelines recommended by two industry groups assembled by the Bush administration earlier this year are a "virtual farce" according to the Connecticut attorney general. Many of the hedge funds are headquartered in the state and their meltdown is a legitimate concern to politicians there. It should be. Not just to them but all Americans. "Hedge funds have become too big and too important to remain outside the rules," said the attorney general. I concur!
America today has a debt of nine trillion dollars that requires us to pay more than two billion dollars a day in interest. Taken together with the more than 40 trillion in social security debt that our children and grandchildren have been saddled with, I do not believe America can continue to carry the risk of a two trillion dollar hedge fund industry collapse.
The regulation of hedge funds will make the financial system more stable and reduce the risk it currently poses to the world financial markets and economy. The subprime crisis has revealed how the banking system and unregulated financial instruments are interwoven with each other, essentially creating one credit market. Policymakers can no longer ignore the systemic risks posed by hedge funds.
Their oversight, risk management and transparency is mandatory to prevent another multi-trillion financial industry meltdown. The voluntary guidelines under which hedge funds currently operate are no longer acceptable in light of what we have learned from the subprime crisis.
In 2007, a presidential working group headed by Treasury Secretary Henry M. Paulson Jr. rejected the idea that the funds needed increased regulation. The voluntary guidelines recommended by two industry groups assembled by the Bush administration earlier this year are a "virtual farce" according to the Connecticut attorney general. Many of the hedge funds are headquartered in the state and their meltdown is a legitimate concern to politicians there. It should be. Not just to them but all Americans. "Hedge funds have become too big and too important to remain outside the rules," said the attorney general. I concur!
America today has a debt of nine trillion dollars that requires us to pay more than two billion dollars a day in interest. Taken together with the more than 40 trillion in social security debt that our children and grandchildren have been saddled with, I do not believe America can continue to carry the risk of a two trillion dollar hedge fund industry collapse.
The regulation of hedge funds will make the financial system more stable and reduce the risk it currently poses to the world financial markets and economy. The subprime crisis has revealed how the banking system and unregulated financial instruments are interwoven with each other, essentially creating one credit market. Policymakers can no longer ignore the systemic risks posed by hedge funds.
posted by Peter de Krassel's Custom Maid Politics at 11:22 PM
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