Top US regulators asked to testify on hedge funds
Reuters Story - September 25, 1998 14:40
WASHINGTON, Sept 25 (Reuters) - Federal Reserve Board Chairman Alan Greenspan and New York Fed President William McDonough are expected to testify before Congress next week on the $3.5 billion bailout of Long-Term Capital Management and the risks of other hedge funds, a Congressional aide said Friday.
"There are a lot of questions that need to be asked," an aide to the House Banking Committee said, adding that no official time has been set for the upcoming hearing.
Others expected to testify before the panel include Treasury Secretary Robert Rubin, Securities and Exchange Commission Chairman Arthur Levitt, and Brooksley Born, the Chairwoman of the Commodity Futures Trading Commission.
Lawmakers, including the committee's chairman James Leach, a Republican from Iowa, have expressed concerns about the Fed's role in arranging the bailout of the Greenwich, Conn. private investment fund.
"It would appear that Long-Term Capital management was deemed by the Federal Reserve to be too leveraged and too intertwined to fail," Leach said in a statement Thursday.
Richard Baker, Chairman of the panel's Capital Markets Subcommittee in an interview said he is concerned regulators may not have enough information about hedge funds to properly oversee banks and securities firms.
"I think we need regulators in to talk about what they learned and when they learned it," the Louisiana Republican said. "I think there needs to be clearer transparency in disclosure of risk to counterparties and investors and that does not appear to be the case at the moment."
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