If a hundred experts were asked to identify the 25 things that need fixing in the U.S. economy today, I doubt that increasing the amount of borrowed money available to hedge funds would be on any list.
After all, we’ve just had a spate of hedge funds that have failed or been forced to close their doors because of some big bets made with lots of borrowed money that didn’t turn out as well as expected. And with returns plummeting, a shakeout in the trillion-dollar hedge fund industry is underway.
So it’s all the more curious that the Securities and Exchange Commission and the Commodity Futures Trading Commission are about to adopt new rules that would effectively lower the amount of their own money that hedge funds or any large investor must put up to buy and hold stocks, options, swaps, futures and other derivative products.
