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New York Times – Hedge funds and the rest of the so-called shadow banking system are almost certainly going to face more regulation. But governments should not try to supervise them directly; instead, it would be far more productive for governments to monitor how they borrow to leverage their investments.
The political momentum for regulating shadow banks is building in advance of a meeting in April in London of representatives of the Group of 20 economies. That much is clear from the European leaders’ meeting over the weekend.
Bloomberg – A group of hedge funds offered to increase disclosure to head off demands from politicians on at least two continents for more transparency.
“We know which way the wind is blowing,” said Andrew Baker, chief executive of London-based Alternative Investment Management Association, the industry’s largest lobby group. “We see a lot of this as inevitable and we’d like to put ourselves in a position to say, ‘You don’t have to drag this out of us.’”
European leaders meeting in Berlin on Feb. 22 said they want to subject the $1.4 trillion industry to more regulation because hedge funds “may present a systemic risk” to world economies, according to German Chancellor Angela Merkel.
Economic Times – European leaders meeting in Berlin on Sunday backed oversight of the world?s financial markets and products, including hedge funds, and urged that sanctions be drawn up to punish tax havens.
A copy of the “chair’s summary” from a summit hosted by Chancellor Angela Merkel and seen by Reuters describes the situation in financial markets as “fraught” and says structural reforms and a focus on public spending are needed to emerge stronger from the global crisis.
Independent – European leaders backed major reform of hedge funds yesterday as part of structural changes to help the world’s financial institutions emerge stronger from the global economic crisis.
Short-selling by the secretive hedge fund industry — selling borrowed stock in the anticipation that the prices will fall — was blamed by some politicians for exacerbating the banking crisis and economic meltdown.
A copy of the summary from the summit hosted by German Chancellor Angela Merkel in Berlin said banks should bring in reforms to ensure they build up a buffer of resources in good times and called for sanctions against tax havens.
