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Old 03-12-2009, 10:52 PM   #21
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Hedge funds are a problem for those who want to keep the bubbles going, I would argue hedge funds have made a remarkable contribution to making markets more efficient. Hedge funds are one of the purest forms of the democratization of markets that I'm arguing in favour of. The regulators and most of the market were screaming "la la la" when some of these hedge funds were pointing out that the emperor had no clothes, that some of these banks were insolvent because of their bad deals, and that property was overvalued. Hedge funds are the convenient scapegoat, IMO.
I disagree from a legal standpoint.

Changes in corporate law have resulted in minority activist shareholders like hedge funds having expansive powers. However there has not been any corresponding increase in fiduciary duties that are applied to officers, directors and controlling shareholders. This has created huge discrepancies and problems and should have been addressed. If we changed fiduciary duty law, you can bet that you would see incredible and immediate changes in how hedge funds operate. Currently they receive all the benefits under corporate law and bear no responsibilities.
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Old 03-12-2009, 10:56 PM   #22
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I disagree from a legal standpoint.

Changes in corporate law have resulted in minority activist shareholders like hedge funds having expansive powers. However there has not been any corresponding increase in fiduciary duties that are applied to officers, directors and controlling shareholders. This has created huge discrepancies and problems and should have been addressed. If we changed fiduciary duty law, you can bet that you would see incredible and immediate changes in how hedge funds operate. Currently they receive all the benefits under corporate law and bear no responsibilities.
I think this is a good point. I would strongly be opposed to banning of hedge funds, but there should be a level playing field.

But hedge funds never (directly) caused any bank to fail that didn't deserve to fail, IMO.

Some want to scapegoat the hedgies for causing the collapse of our global economic system which I think is a nonsensical viewpoint. I don't remember any hedge funds in the early 1930's.

It's funny to me that people blame 'the markets' for bad financial and bad regulatory decisions. I would argue, nothing has gone wrong with markets. The markets have reacted exactly as one would expect.
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Old 03-13-2009, 06:24 PM   #23
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Bernanke will be doing a little PR on 60 Minutes this Sunday. First tv interview for a Fed Chairman in over 20 years. Too bad Mike Wallace retired.
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