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Fed: Hedge Funds Get Too Much Credit In a sign of growing concern, the president of the New York Federal Reserve calls on banks to tighten up their lending to hedge funds.

Tim Reason, CFO.com | US
May 16, 2006

"Hedge-fund operations"

Sir: In my view, Fed the lesser meddle the hhedge funds' function the better for financial market. Most of mid-management of Central Banks closely related to commercial bankers who have the same way of thinking and are conservative and highly regulated in their decisions. They need such constarints due to commercial banks' deposit are on "fiduciary trust" to the depositors, and use of funds are higly regulated but they need profits to sustain their business. Hedge-fund functions are simply needed to reduce commercoal banks' risk, and could be helpful. Is hedge fund risky? the answer is "yes" but it could be managed internally and calculated the risk. The debacle such as LTCC could happen even in the highly regulated commercial banks (BONE) and Savings and Loan industry with the by-product of RTC to clean out the "mess" at the expense of tax-payer? So, far "touch wood", there is no hedge-fund massive default that could cost U.S. tax-payer yet. Fed and regulator's intervention will not do justice to hedge fund's operations, albeit they are less "perfect" but "effcient".

Posted by Casey Tjang | May 17, 2006 2:35 PM ET