Take a quick read of Christopher Cox’ Testimony Concerning the Regulation of Hedge Funds. Now consider excerpts from Bloomberg News on November 11, 2006:
NEW YORK — The Securities and Exchange Commission will propose rules next month raising asset requirements for investing in hedge funds after Amaranth Advisors LLC lost $6.5 billion on bad natural gas trades…Senate Finance Committee Chairman Charles Grassley has asked Cox and Treasury Secretary Henry Paulson to figure out ways to boost transparency in the $1.3 trillion hedge-fund industry, which is largely unregulated. Grassley said in a letter Oct. 16 that “hedge-fund investments could put the retirement security of American workers in jeopardy.”
Let me get this straight. Amaranth blows up so we need new laws? I am for transparency, but how about some transparency for the true intentions of politicians too? Grassley is worried about pension fund money in hedge funds, but not pension fund money in mutual funds? What those can’t go down? Of course they can go down and do (i.e. dot com bubble)!
My gut tells me there is a story behind the story here. How much lobbying money is being pushed into Congress from big mutual fund firms seeking to protect their monopoly on keeping retirement assets locked up in ‘long only’ investing strategies? I bet it is a huge dollar figure. The government’s effort to keep the average Joe away from alternate investing strategies is not so noble in my opinion.