Fort Worth Business Press – The rescue of the American financial system proposed by Treasury Secretary Timothy Geithner is, in all but name, a gigantic hedge fund. The government would lend vast sums to private investors to enable them to buy loss-ridden assets at discounts from banks with the prospect of making sizable profits. If that’s not a hedge fund, what would be? The hope is that the $14 trillion U.S. banking system would expand lending if it could get rid of many of the lousy securities and loans already on its books.

Almost everyone thinks a healthier banking system is necessary for a sustained economic recovery. Can the Geithner plan work?

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Tags: assets, banking system, banks, business press, economic recovery, loans, private investors, sizable profits, sums, timothy geithner, treasury-secretary, trillion

guardian.co.uk – Secretive hedge fund barons, blamed by many for undermining Britain’s financial stability, will be unmasked on Tuesday when they are forced into the public spotlight by the powerful Treasury select committee.

As suggestions grow that hedge funds have made huge sums shorting UK bank stocks and sterling, the billionaire Chris Hohn and Liberal Democrat-supporting tycoon Paul Marshall will be quizzed on whether the predicted decimation of hedge funds as a result of the financial crisis could destabilise the global economic system further.

Hedge fund bosses will argue that they manage "only" £1.3 trillion of cash, which is less than a large fund manager, and that not one hedge fund has received a public bail-out. In addition, of the 150 bans or censures levelled by the Financial Services Authority since 2005, only two have involved hedge funds. They will also say that there have been numerous examples of hedge funds shorting sub-prime assets ahead of the credit crunch.

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Reuters- It’s turning into a busy summer for U.S. lawyers who advise hedge funds as the industry faces growing questions about potentially manipulative trading and regulators are knocking at fund managers’ doors.

With the markets in turmoil, the loosely regulated sector is under increasing scrutiny. The U.S. Securities and Exchange Commission recently sent subpoenas to more than 50 firms regarding possibly abusive trading activity.

Some funds have sought advice to be sure they are complying with the rules, which include new limits on short-selling.

Others are calling for help to set up new funds as managers try to find ways to make money in a rough market.

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