By Svea Herbst-Bayliss and Matthew Goldstein
BOSTON/NEW YORK, June 25 (Reuters) – It appears Wall Street investment banks can stay in the highly-profitable hedge fund business after all.
An overhaul of financial regulations hammered-out by U.S. lawmakers after weeks of negotiation would permit Wall Street banks to continue to manage and sponsor hedge funds along with private equity funds, according to lawyers and Wall Street officials familiar with the massive bill.
For months Wall Street bankers and hedge fund managers have worried that the legislation, which could be signed into law by President Obama within two weeks, would prohibit investment banks from running hedge funds and possibly force them to sell these often very profitable businesses.
But the version of the bill agreed to by lawmakers on Friday morning would not force the draconian changes sought by some critics of the financial industry, said sources familiar with the bill.
Still, Wall Street is not quite ready to celebrate.
That’s because a final language of the financial regulatory reform bill in not yet public and must still be voted on by Senate and the House of Representatives before going to Obama.