West Palm Beach (HedgeCo.Net) – Billionaire George Soros used his appearance in Brussels to not only promote his new book, "The Paradigm of Financial Markets," but to call upon a much heated topic: hedge fund regulation.
The founder of the famed Quantum Fund calls for tighter regulation on hedge funds, and the banks that lend to them. Soros believes that banks should exercise more caution when lending to these funds, some of which use massive amounts of leverage to place risky bets.
"I think that hedge funds need to be regulated like all other market participants," Soros said yesterday at a conference.
The Quantum Fund catapulted hedge funds into the mainstream after garnering massive returns from bets against the British Pound. Soros is estimated to be worth $8.5 billion from his success in hedge funds.
However, Soros’ fund used a Global Macro strategy to make millions, not leverage. In fact, it has been the recent hedge funds that have used loans backed by mortgage-backed securities, that have cost investors billions of dollars and have resulted in several large name funds to be shut down.
Soros also agrees with the Fed’s decision to step in and give the economy a boost. It’s because of their actions, he says, that we are not headed towards another Great Depression.
"It is the job of the authorities to prevent the system from collapsing. They know how to do it and they are doing it," he said.
Julie Scuderi
Senior Editor for HedgeCo.Net
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