Saturday, January 23, 2010

Hedge Fund Regulation: How to Avoid a Boondoggle

The central role of wildcat outfits in causing or aggravating blowups in the financial arena has led to widespread calls for hedge fund regulation. Amid the furor, policymakers have responded in their usual fashion by cooking up legislation intended to curb the excesses that led to the wipeouts.

However, past experience suggests that the heap of regulations will merely serve to throw a monkey wrench into the machinery of finance. In that case, the main impact of the legislation will be a mound of paperwork and bureaucracy which does little or nothing to prevent similar fiascos in the future.

If the stumpers are to be tackled head-on, a sweeping change is required in order to blunt the threat of hedge funds armed with weapons of mass carnage. The purpose of this article is to lay bare the real problems along with a cogent approach to eradicating the bogeys.

More on Hedge Fund Regulation: How to Avoid a Boondoggle.

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