Jeremy Warner: Hedgies seem to have won a stay of execution
Friday 03 April 2009
Yet the truth of the matter is that they had very little to do with the present crisis and, in the scale of things, are hardly of any importance at all. Most of them are only mildly leveraged, while even the most debt- geared of the lot are not nearly as leveraged as the average bank.
None of them has had to be bailed out by the taxpayer, and there is no evidence that they contributed to the systemic collapse of the banking industry. Even the totality of their assets doesn't match the balance-sheet size of a major bank such as Royal Bank of Scotland.
As suggested by Lord Turner, those that behave like banks will in future be regulated like banks, with capital requirements to match. That's going to make the leveraged returns of the past much more difficult to achieve, yet these have become virtually impossible over the last two years in any case. Hedge funds were some of the first victims of banking deleverage.
As for regulating hedge funds more closely, it looks as if the G20 will adopt the system already operated in the UK, where hedge fund managers are subjected to regulatory oversight by the Financial Services Authority even though their funds may be based offshore. A voluntary code of conduct on transparency, risk management and governance provides further protection for investors.
It's the lot of the poor hedgie that he's going to be demonised whatever he does. But it doesn't look as if he'll be drummed out of business altogether.
Tourist films plane's descent just metres above packed Caribbean beach
Bali nine: Welcome to 'Execution Island' – the Indonesian holiday resort where foreigners are sent to die
How Homer Simpson discovered the Higgs boson over a decade before scientists
The 'sex selfie stick' lets you FaceTime the inside of a vagina
Harrison Ford plane crash: Star Wars actor 'seriously injured' after light aircraft crash lands
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
Durham Free School: 'Creationism taught at' free school facing closure
End of the licence fee: BBC to back radical overhaul of how it is funded
Nigel Farage promises Ukip will not 'stigmatise' would-be migrants – and says he wants 'everyone to speak the same language'
Ex-head of MI6: 'We shouldn't kid ourselves that Russia is on a path to democracy'
Most people think legal tax avoidance is just as wrong as illegal tax evasion, poll suggests
iJobs Money & Business
£8 per hour: Recruitment Genius: This Pension Specialist was established early...
£30 - 35k + Bonus & Benefits: Guru Careers: We are seeking an Executive Assist...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...