scenes from a meltdown

Hedge-Funders React to Possibility of Increased Regulation

Treasury Secretary Tim Geithner is set to appear in front of Congress again today, where he is expected to detail the administration’s plans for revamping the regulatory system, which will include imposing strict rules on hedge funds and other traders of exotic financial instruments. The Times checked in with a couple of New York hedge-funders to see how they felt about the possibility of increased government oversight, and as expected, they were a little defensive.

Intel boy toy John Paulson of Paulson and Company played it cool.

We’re for anything that protects investors,” Mr. Paulson said. While he acknowledged that some hedge funds might have relied too heavily on leverage to improve their returns, he added that “there hasn’t been one problem at all to global systemic risk in the U.S. and abroad from a hedge fund.”

Except for Long Term Capital Management, but, you know, that wasn’t his and anyway ancient history. Omega Advisors’ Leonard Cooperman, on the other hand, made it known he felt he was being unfairly financially profiled, and suggested that the government’s fool regulators come back when they have some real charges.

I’m already heavily regulated,” Cooperman said, saying that his fund was subject to oversight from the SEC, the Commodity Futures Trading Commission, the Fed, and other organizations. “The truth of the matter is, most major hedge funds are registered with the SEC, they are regulated with the CFTC, and they are subject to Federal Reserve margin requirements,” he said, referring to the Fed’s rules that require all investors to set aside funds when buying securities on credit. “The regulatory system is already in place. Let them enforce what they have.”


Geithner to Outline Major Overhaul of Finance Rules [NYT]

Hedge-Funders React to Possibility of Increased Regulation