Outlook: There is good news in sight for the beleaguered hedge fund industry courtesy of our friends in the US.
Grimly aware that a European Commission crackdown on regulation of hedge funds and private equity spells disaster for the EU's predominantly London-based industry, Treasury ministers have been desperately lobbying their counterparts in Brussels for months, but their pleas have fallen on deaf ears.
Now, however, the Americans have woken up to the fact that many of their hedge funds would find it impossible to do business in the EU under proposals for regulatory reform. In recent weeks, US Treasury officials have thus been touring the EU, letting their displeasure be known.
It appears that the Americans' involvement is already paying dividends. Sweden, which holds the EU presidency, was quietly letting it be known yesterday that it will ensure some sort of compromise is brokered. The Alternative Investment Management Association, which represents the sector's interests, now thinks disaster may be averted.
That's good news for London. Hedge funds and private equity investors have been popular whipping boys in this country for too long. Before the credit crunch, the fashion was to accuse the latter of asset-stripping and profiteering. Once the crisis began, the focus moved to greedy hedge funds and dishonest short selling, though not a scrap of evidence of wrongdoing has ever been produced.
By all means dislike them if you must, but London's 450 or so hedge funds manage about £250bn and employ, directly and indirectly, 40,000 people. We simply can't afford to allow the business to go up in smoke thanks to a kneejerk reaction from European regulators.