Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
MSN Money UK – Northern Rock was the darling of the UK mortgage sector, but fuelled its rapid growth by borrowing in money markets and selling on its mortgage debts rather than customer deposits.
The eruption of the credit crunch in August 2007 as banks clamped down on risks shattered its business model and forced it to seek emergency aid from the Bank of England.
Forbes – German Chancellor Angela Merkel on Thursday called on the European Commission to quickly approve Germany’s planned aid for lender Commerzbank as part of its bank rescue package.
Germany is in a dispute with the Commission over whether the aid for Commerzbank complies with the terms of the 500 billion euro ($633.4 billion) rescue fund that the EU has approved.
Washington Post – The European Union will this week take the first step toward new rules governing high-risk hedge funds, the EU’s financial services chief said Monday.
EU Commissioner Charlie McCreevy, long opposed to regulating the funds, is bowing to calls from the G-20 group of the world’s leading industrialized and emerging economies and many European politicians for more oversight for hedge funds that invest large sums and often operate in near secrecy.
He said the European Commission would consult European financial firms and others, sparking a debate that might see regulators eventually come up new rules.
He said he wanted to focus on the risks hedge funds might pose to the financial system if current rules were left in place. EU regulators also have to define hedge funds and consider how they should deal with hedge funds based in jurisdictions with little supervision, he said.
Straits Times – EU nations on Monday reached a compromise agreement on new rules to cut CO2 emissions from new cars from 2012, with penalties for automakers who fail to comply, a negotiator said.
The deal, part of wider EU efforts to tackle global warming, was reached during talks between representatives of the 27 EU nations, the European parliament and the European Commission, following months of detailed and sometimes heated negotiations.
‘It isn’t the commission’s initial proposal, but there is some compensation thanks to a (new) long-term objective’ on cutting emissions and ‘with very strong penalties’ for non-compliance, the source said.
People – Bowing to Europe’s enthusiasm fora new global financial order, U.S. President George W. Bush has agreed recently to host a world summit on reforms of the international financial system.
After a weekend meeting at Camp David some 100 km north of Washington D.C., Bush said in a joint statement with French President Nicolas Sarkozy and European Commission President Jose Manuel Barroso that the summit would "seek agreement on principles of reform needed to avoid a repetition of the problems and assure global prosperity in the future."
It was regarded as a victory for European Union (EU) leaders, who are pushing hard for an overhaul of the current global financial system in the wake of the financial crisis.
Europe has become a big victim in the financial crisis, which originated in the United States. As European banks are still struggling with tight credit triggered by the U.S. sub-prime mortgage defaults, Europe learned it can hardly be separated from the United States.
Reuters – Hedge funds and private equity funds should be monitored closely but there are no plans to propose regulation, a top European Commission official said on Monday, sparking anger from left wing lawmakers.
It has been the heavily regulated sector of the financial services industry, including banks, that has been allowed to "run amok with little-understood securitization vehicles," EU Internal Market Commissioner Charlie McCreevy told the European Parliament.
"I don’t believe it is necessary at this stage to tar hedge funds and private equity with the same brush as we use for the regulated sector," said McCreevy, who has sole powers to propose EU-wide financial regulation.
Times Online – The European Parliament will support calls tomorrow for Europe-wide legislation aimed at making the inner workings of hedge funds and private equity more transparent.
The proposals – championed by Poul Nyrup Rasmussen, the Socialist MEP and a former Danish Prime Minister – call for clear rules for these financial players, whose influence on the economic landscape is increasing.
MEPs want the European Commission to present, before the end of the year, legally binding minimum transparency rules on how investments are financed. These rules would also cover the qualifications of managers, possible conflicts of interest, registration of hedge funds and disclosure of ownership structures.
Peter Skinner, a Labour MEP and the party’s spokesman on financial services, said yesterday: “Current self-regulation attitudes are not enough to arrive at satisfactory conclusions, especially in the light of the current crisis. This is an important step to tackle current problems, including lack of transparency.”
