May 19, 2006
No regulation for hedge funds
Hedge funds have suddenly become the rage all over. What was considered a risky adventure fit for those moneyed few, has suddenly become one of the best methods of making money. And this has led to an explosive growth of this once reviled method of investment. Today the mounting integration of hedge funds into the world financial system has made most industry experts and even central bank policy-makers wary. They believe that hedge funds have increased the risks in the industry and need to be minutely scrutinized.
Sounds more like a doomsday warning. While on the one hand, this industry has got a lot of credibility thanks to institutional investors investing their funds into the hedge fund market, there are others who believe that the growth of hedge funds could have serious implications. However, Federal Reserve Chairman Ben S. Bernanke, like his predecessor, does not think regulating hedge funds is a good idea. Rockymountainnews.com reports:
Bernanke on Tuesday told a hedge-fund conference hosted by the Atlanta Fed that he's skeptical about proposals such as a database of fund holdings that would let authorities monitor risk in the broader financial system. Instead, firms that deal with hedge funds are best equipped to do the job because they have the "best incentives".
Read more: Fed chief wary of regulating hedge funds
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