The NYT reported on Friday that the Bush administration's working group on capital market regulation decided that there was no reason to tighten rules for financial disclosure for hedge funds. It might have been useful if they talked to some of the economists/analysts who think that there is some danger to the financial system from having more than $1 trillion floating around in complete secrecy.
At least by his actions, if not his words, Alan Greenspan falls into the camp who believes that they require regulation. Remember, he said that it was necessary for the Fed to intervene in the collapse of the Long-term Capital Hedge Fund in order to protect the financial system.
Perhaps President Bush's working group thought additional regulation was unnecessary based on the court decision that had just been issued, which held that banks could be responsible for the loses suffered by hedge funds for which they act as a prime broker. If the banks that act as the agents for these funds are held liable for the losses their investors suffer, then the banks will themselves impose some real regulation on the funds. Of course, if the money managers that sink millions into funds that they know nothing about were actually held accountable for their investments, then we would have to worry much less about hedge funds.
I’m writing to you today with a sense of urgency that I haven’t felt since I began my journalism career. As executive editor of The American Prospect, I’ve witnessed firsthand how independent journalism serves as a crucial bulwark against the erosion of our democratic institutions. Today, that role is more vital than ever. Can you step up today and show your support?
The winds of authoritarianism are blowing stronger. We’re seeing alarming signs of a coordinated effort to silence critical voices and undermine the very foundations that support progressive causes. As Bob Kuttner presciently wrote in our August 2024 issue, a weaponized IRS could attack the very foundations of the progressive movement. We need readers to step up and help us dig in for the long haul.
We’re falling behind in our spring fundraising campaign, and with so much at stake we can’t afford to come up short. If you value fearless, independent journalism that holds the powerful accountable and defends democracy, now is the time to step up. The American Prospect depends on reader support to stay in the fight. Pitch in today and help us close the gap. Please consider making a donation today.
–David Dayen, Executive Editor
Copyright 2025 | The American Prospect, Inc. | All Rights Reserved
