Comments on: When hedge funds embrace regulation http://blogs.reuters.com/felix-salmon/2009/04/03/when-hedge-funds-embrace-regulation/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: S. Garrett http://blogs.reuters.com/felix-salmon/2009/04/03/when-hedge-funds-embrace-regulation/comment-page-1/#comment-98 Fri, 03 Apr 2009 19:58:31 +0000 http://blogs.reuters.com/felix-salmon/2009/04/03/when-hedge-funds-embrace-regulation/#comment-98 I agree entirely with S. Hellinger. It’s absolutely correct.

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By: S. Hellinger http://blogs.reuters.com/felix-salmon/2009/04/03/when-hedge-funds-embrace-regulation/comment-page-1/#comment-95 Fri, 03 Apr 2009 19:12:47 +0000 http://blogs.reuters.com/felix-salmon/2009/04/03/when-hedge-funds-embrace-regulation/#comment-95 Increased regulation sounds fine until you remember that
there was a massive failure by the banking regulators and it needs to be addressed much more explicitly. I am a former senior bank regulator and I spent many years in the investment banking world involved in risk management, risk reporting and risk technology. There appears to be a failure to recognize that the regulatory process can only work if there are good regulatory people looking at the matters every day. If I may let me offer the following comments:

1. The bank regulators had the authority to examine any aspect of a bank¹s activities. They had the authority to figure out what was going on at the banks and to limit it. The regulators did nothing. So all the new regulations on paper will mean nothing if the regulators cannot or will not do their jobs.

2. Consolidating regulators or setting up an international cooperative coalition will not likely achieve the desired goals. Sending a regulator who makes $50,000 dollars a year to examine the activities of sophisticated financial traders who make millions of dollars a year is not a fair battle. And if you have ever worked in a government agency, as I did for over 4 years, you will be intimately familiar with the viciousness of the turf battles among the senior officials. There is a lot of deadwood at the top of the agencies and it needs to be cleaned out. A Herculean task if there ever was one.

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By: Fred B http://blogs.reuters.com/felix-salmon/2009/04/03/when-hedge-funds-embrace-regulation/comment-page-1/#comment-93 Fri, 03 Apr 2009 18:11:47 +0000 http://blogs.reuters.com/felix-salmon/2009/04/03/when-hedge-funds-embrace-regulation/#comment-93 I do think that regulation has long been needed, and looking at the people operating these funds will make it tough to do. Greed is a many headed snake and it is tough to watch all the heads.

I do think that investors may be much wiser than before and will want more concrete information and insurance before risking their money. I do think the silver lining to this recent shake out of investment funds and banks has been the training of investors.

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By: Don the libertarian Democrat http://blogs.reuters.com/felix-salmon/2009/04/03/when-hedge-funds-embrace-regulation/comment-page-1/#comment-80 Fri, 03 Apr 2009 15:55:14 +0000 http://blogs.reuters.com/felix-salmon/2009/04/03/when-hedge-funds-embrace-regulation/#comment-80 It’s an excellent post:

“But this crisis was primarily caused by managements and individuals throughout the financial system who exercised extremely poor judgment. The private sector, not the public sector, is where the biggest mistakes were made.”

Bingo!

“Government action could easily spill over into gross over-reach (like the bonus-tax fiasco). But a combination of private responsibility and practical government regulation will help ensure that the capitalist system continues to be a source of opportunity and prosperity for people throughout the world.”

Can you say “libertarian Democrat”?

Here’s a comment from long ago:

“Saturday, October 4, 2008
The Path To Re-Regulation
Gross on regulation resulting from this crisis:

“In the meantime, a surge in regulation of the financial sector will be unleashed, probably an inevitable result of the problems and rescues of recent months.

“Twelve to 24 months down the road, all of these high-flying investment banks and banks will be reregulated and downsized,” Mr. Gross said. “They won’t become arms of the government, but they will be supervised and held on a tight leash.”

The greater regulation should draw investors back to the market and away from what seems to be their current financial strategy — stuffing their cash in mattresses.”

One of the probable downsides of a crisis like this is the problem of over-regulation resulting, which is why I favor enough regulation to keep this kind of crisis from occurring. However, as even Gross admits, some regulation is necessary for investors to re-enter the market. Let’s hope we strike a better balance this time.”

In other words, you actually need regulation in order to:
1) Get people investing again
2) Get people to buy into our system at all

I also agree here:

“Reform must begin with a regulatory regime focused on “behavior” instead of “systemically important institutions.” Today, even small entities that trade complex instruments or are granted sufficient leverage can threaten the global financial system.”

Choose Human Agency Explanations over Mechanistic ones if you want to do some real good.

Finally, congratulations on your new venue. Reuters is terrific. For one thing, they had some of the earliest reporting on the possible social disruptions and dislocations in this crisis.

As well, their page on African news is the best I’ve found. Try it:

http://af.reuters.com/

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