September 30, 2006
Now, A Bill To Study Hedge Fund Oversight
This just had to happen right? How long could the government sit back and watch the hedge fund industry do as it pleased? So, the U.S. House of Representatives recently passed a bill calling for a federal study of hedge funds. House passage of the bill comes days after hedge fund Amaranth Advisors disclosed the biggest hedge fund loss ever -- about $6 billion -- on wrong-way natural gas market trades.
This step marks the latest step in the government's effort to come to grips with a $1.2 trillion industry that has become a powerful financial force. The bill would require a wide-ranging study of hedge funds, their risks and regulation. The President’s Working Group on Financial Markets, a multi-agency committee, will conduct this study. However, markets have largely shrugged off the Amaranth debacle. This has led some officials to say existing rules meant to minimize the systemic economic risk of hedge funds are adequate. Reuters.com reports:
Massachusetts Democratic Rep. Barney Frank said on the House floor that the bill should be seen by the hedge fund industry as a signal that "this is something we want to look at; we will come back next year and deal with this further."
Read more: US House passes bill to study hedge fund oversight
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