Wednesday, 30 July 2014
Last updated 8 hours ago
Oct 31 2006 | 10:10am ET
The former head of the world’s biggest hedge fund is calling for U.S. regulators to probe the industry to determine if “there is sufficient transparency” and “enough liquidity” in the system.
Hank Paulson recently raised these issues on Bloomberg television in his new capacity as a regulator.
The newly-minted Treasury secretary – whose department is working with the Securities and Exchange Commission, Federal Reserve and Commodity Futures Trading Commission to examine the impact of hedge funds on financial markets – is the former chairman and CEO of Goldman Sachs, which he helped build into the world’s largest hedge fund, with Goldman Sachs Asset Management now boasting more than $20 billion in assets under management.
“We need to be vigilant and make sure we are thinking through all of the various risks and that we are being very careful here,” Paulson said. “This is an industry that has added a lot to the capital markets, and it has been a positive force.”
It’s also an industry that has been a positive force for Paulson, and has added a lot to his bank accounts. Paulson made almost $40 million dollars at Goldman in 2005, and his stock holdings in the firm were worth some $700 million before he joined the Treasury, both in no small part due to the wild success of the firm’s hedge fund unit.
Of course, maybe it just depends on where you sit. Paulson’ predecessor at Treasury, John Snow, told Bloomberg News today that he favors a “lighter” touch regulatory regime for hedge funds. “The far bigger risk is overreaching regulation.”
Now the chairman of private equity firm Cerberus Capital Management, Snow said, “The real [police] of these pools of capital are the investors.” He added that any government intervention would imply, “Don’t worry. Now the government is watching over you and there aren’t any problems.”
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…