Chicago Tribune – "The key change in the next decade is that policymakers around the world have chosen the winners and losers," Griffin said at a Wednesday panel. "The winners are the banking system."

By selecting commercial banks to become the centerpiece of the financial industry, the government closed the era of investment banks and hedge funds with highly leveraged balance sheets.

That should translate into safer and more conservative investing choices, but also less innovation by financiers and higher interest rates for borrowers, he predicted.

As roughly 8,000 hedge funds respond by reducing the size of their multitrillion-dollar balance sheets, their role in the system will inevitably be diminished, Griffin said.

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Tags: bear-stearns, ccm, currencies, data-group, european-exchange, exact-nature, executive-director, fund-balance, market-stability, mortgage-lenders, sculptor

Guardian.co.uk – The Tories were accused last night of being bankrolled by a City ‘wolf pack’ after it emerged that the party was receiving hundreds of thousands of pounds from hedge fund managers who have been making vast sums of money from plunging bank shares.

After the Financial Services Authority had, in effect, barred the controversial practice of short-selling bank stocks and the Treasury was forced to draw up a rescue package for Bradford and Bingley, it emerged that a small group of City financiers who have made fortunes from falling stock markets are paying at least £50,000 a year to the party.

Their donations entitle them to membership of an elite supporters club called the Leaders Group, which bestows invitations to functions attended by David Cameron, something that has prompted allegations that the Tory leader is supporting ‘cash for access’. Last night, in an attempt to quell a mounting row over the party’s finances ahead of this week’s conference, the party put details of the Leaders Group on its website.

It has also emerged the Conservatives have continued to receive money from Lord Laidlaw, a Monaco-based tax exile who has given the party more than £3m. One donation came after the fact that he had taken part in orgies with prostitutes was exposed in the tabloids.

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Tags: appropriate-technology, ccm, credit-losses, global-economy, housing-market, peril, top-businessmen

Daily Telegraph – Stanley Fink, the former boss of Man Group, who became one of the City’s best-known financiers, is teaming up with Lord "Cashpoint" Levy to make a spectacular comeback to the hedge fund industry he quit last year.

Known as the "Godfather" of British hedge funds, Fink is to become chief executive of International Standard Asset Management (ISAM), a small London-based commodities trader. Lord Levy, the former Labour treasurer who was Tony Blair’s special envoy to the Middle East, is to be chairman of the group.

It will be Levy’s first high-profile role since being embroiled in Labour’s cash-for-honours’ scandal two years ago.

The pair plan to build ISAM, which currently has two funds trading in gold and fixed income, into a substantial player in the hedge fund world.

The return of Fink will be a major talking point in the City.

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Tags: bad-news, ccm, distressed-debt, financial-regulator, home-loans, percent-stake, special-interests, tax-rate, tracts, volatility