The Independent – Grimly aware that a European Commission crackdown on regulation of hedge funds and private equity spells disaster for the EU’s predominantly London-based industry, Treasury ministers have been desperately lobbying their counterparts in Brussels for months, but their pleas have fallen on deaf ears.

Now, however, the Americans have woken up to the fact that many of their hedge funds would find it impossible to do business in the EU under proposals for regulatory reform. In recent weeks, US Treasury officials have thus been touring the EU, letting their displeasure be known.

It appears that the Americans’ involvement is already paying dividends. Sweden, which holds the EU presidency, was quietly letting it be known yesterday that it will ensure some sort of compromise is brokered. The Alternative Investment Management Association, which represents the sector’s interests, now thinks disaster may be averted.

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Financial Times – The US Federal Reserve will launch its financing ­programme, worth up to $1,000bn, for consumer and business loans in the coming days, amid concerns that hedge funds might find it difficult to take advantage of the scheme.

The programme – the term asset-backed securities loan facility (Talf) – is the cornerstone of the US authorities’ push to jump-start the credit market. Officials at the central bank say it will be up and running by the end of this month.

Fed and Treasury officials say this is an essential complement to efforts to repair the banking system. The idea is to boost the supply of new credit-card loans, student loans and car loans by providing low-cost finance to investors who buy these loans bundled up as securities in the secondary market.

But the Talf relies on private-sector investors being willing and able to take advantage of the financing the Fed makes available.

Consultations have revealed potential obstacles to participation. The most significant of these are limits on the ability of investors who use Talf finance to buy an asset to transfer the loan when they sell it.

An asset sold with low-cost three-year financing attached would command a higher price than an asset that had to be financed in distressed private markets at the point of sale.

Moreover, most hedge funds do not have permanent capital so they have to consider the risk that redemptions could force them to sell the assets before the three years are up.

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Tags: asset backed securities, banking system, business loans, car loans, consultations, cornerstone, credit card loans, federal-reserve, financial times, loan facility, obstacles, point of sale, private markets, private sector investors, redemptions, securities loan, student-loans, treasury officials, us-federal-reserve