Hedge fund regulation is off the table in Washington

WASHINGTON – The debate surrounding whether hedge funds require regulation appears to be dying down after the latest hearing on Capitol Hill. Testifying before the House committee on financial services, members of the President's Working Group (PWG) on Financial Markets, including Kevin Warsh, governor of the Federal Reserve Board, reiterated that stringent regulation is not the answer.

"The most effective mechanism for limiting systemic risks from hedge funds is market discipline, and the most important providers of market discipline are the large global commercial and investment banks that are their principal creditors and counterparties," Warsh said.

The PWG renewed its commitment to the four general principles designed to keep systemic risk in check that it announced in February. Rather than creating a regulatory framework around hedge funds, Warsh noted that: "because all

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