Treasury Says Hedge Fund Stand Is No ‘Endorsement’ Of Status Quo

Feb 27 2007 | 5:13pm ET

A top U.S. Treasury official today said the department’s opposition to hedge fund regulation was “not an endorsement of the status quo.”

Speaking to financial industry professionals, Robert Steel, undersecretary for domestic finance, characterized the principles and guidelines for hedge funds unveiled last week as a call for greater vigilance, and not, as some might have it, blissful ignorance.

“Instead, they represent a uniform view from the Treasury Department and the group of key independent regulators that heightened vigilance is necessary and desired to address market developments,” he said. He reiterated that Treasury thinks that new regulations are unnecessary, but acknowledged criticism calling the guidelines overly vague and unenforceable. The problems associated with hedge funds are “complex,” he said, “and unfortunately will not be solved with a one-time regulatory fix.”

“We believe that the collective decisions of self-interested and informed counterparties, reviewed by regulators, provide the very best protection against systemic risk,” he said. “In fact, if the group believed that our regulators needed more authority to address these issues, [Treasury] Secretary [Henry] Paulson would have led the charge in asking for it.”


In Depth

Royalties: The Alternative Assets of the Music Industry

Jul 8 2016 | 7:01pm ET

Recent market volatility has investors seeking greater insight into alternative...

Lifestyle

Vortic: Making Great American Watches Again

Jul 25 2016 | 6:29pm ET

If you are compelled by stories of entrepreneurial vision & drive, or simply...

Guest Contributor

MPI: Like Stellar Returns? Better Understand the Risks First

Jul 22 2016 | 8:44pm ET

When the press reports extraordinarily strong relative or risk-adjusted returns...