Hedge Funds' Free Ride

Remember last year how, when politicians made a big fuss over how hedge funds are unregulated, Wall Street sent a bunch of lobbyists down to Washington and those same politicians went silent? In the wake of the financial crisis, the Congressional Committee on Oversight and Government Reform has reopened the hedge fund issue. "Currently, hedge funds are virtually unregulated," said Chairman Henry Waxman in a hearing today. "They are not required to report information on their holdings, their leverage, or their strategies. Regulators aren't even certain how many hedge funds exist or how much money they control." Waxman said he was concerned that hedge funds, which are highly leveraged, might “blow up” like other financial sectors. George Soros, who testified before the committee and manages one himself, suggested that they “will shrink by between 50 and 75 percent.” Hedge funds lost $100 billion in October.