Regulation

The Bank of England and Financial Services Authority have launched a new offensive against the European Union’s proposed hedge fund and private equity rules.

U.S. Treasury Secretary Timothy Geithner said the White House would fight to close the so-called “carried interest” loophole that taxes alternative investment managers at the capital gains rate on their share of a fund’s profits.

The regulator has sent a request for information to Paulson & Co., the $30 billion New York-based hedge fund run by John Paulson, about collateralized debt obligations. Paulson made his name and fortune three years ago when he bet against the subprime mortgage market and won big, earning $15 billion for his investors.

Paulson is cooperating with the request, and is not the target of the probe. The SEC has also subpoenaed most major banks for information about their sale and marketing of CDOs.

President Barack Obama’s plan to bar banks from the alternative investments industry may be dead on arrival on Capitol Hill.

U.S. and British regulators yesterday agreed to expand their cooperation on hedge fund oversight.

President Barack Obama is asking hedge fund and private equity managers to foot a big chunk of the bill for his proposed $3.76 trillion budget.

Among the 1,000 proposed amendments to the European Union hedge fund regulation bill are measures that would curb its impact and tax fund manager bonuses.

President Barack Obama’s plan to bar banks from proprietary trading or participating in the alternative investments industry could be passed by the summer, the head of the House Financial Services Committee said.

The French President, speaking at the World Economic Forum in Davos, Switzerland, said the President Barack Obama is "right" about reining in banks, but warned that the matter must be decided by the Group of 20 and not just the United States.

Also at Davos, Financial Services Authority Chairman Adair Turner tentatively backed the Obama plan. The British government has already said it opposes implementing Obama's rules in the U.K.

More than 1,000 amendments have been proposed to the European Union alternative investments regulation bill.