Geither Warns French FinMin Over EU 'Passport'

Oct 6 2010 | 12:27pm ET

U.S. Treasury Secretary Timothy Geithner has again injected himself into the increasingly contentious debate over the European Union's proposed hedge fund regulations.

Geithner yesterday wrote to his French counterpart, Christine Lagarde, offering a warning against blocking foreign hedge funds from EU markets. Lagarde last week orchestrated the sinking of a compromise that would have awarded a "passport" giving access to all EU jurisdictions to foreign hedge funds that meet the stringent new requirements of hedge funds and private equity firms in the proposed alternative investments directive.

The U.S. is far-and-away the largest hedge fund center in the world.

"A proposal that limits or delays the access of third country firms to a passport—while granting EU domiciled managers and funds access to the European market—would be discriminatory and contrary to G20 commitments," Geithner wrote. "We would consider adoption of such a proposal as unfair and damaging to our shared interest in maintaining an open, global financial system."

Geithner's warning to Lagarde is the third he's written to EU leaders on the issue, and his second to Lagarde. In April, he wrote to Lagarde and his British, German and Spanish counterparts urging them not to "discriminate against foreign firms." In March, he wrote to Michel Barnier, the EU's internal markets commissioner, earning something of a rebuke from Barnier, who said the EU wouldn't be "bullied" by the U.S.

Barnier now says that the passport will have to be included in the hedge fund rules.


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...