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A Frank discussion

The shift of power on Capitol Hill has left many alternative asset managers curious about the tone of regulatory oversight from the new Congress.

Private Equity Manager recently conducted an interview with Representative Barney Frank, from Massachusetts, the ranking Democrat on the House Committee on Financial Services, concerning his approach to the issues facing the industry:

PEM: Will Democratic control of Congress mean regulation of hedge funds?
BF: I get this question a lot: ?What are you going to do about hedge funds?? And I have a simple answer: ?I don't know.? I think we should have hearings to look at the size, scope and what, if any, systemic risk would be posed by major failures of hedge funds, if that were to happen. Hedge funds are a relatively new phenomenon, and I thing we need to look into the industry without any predisposition.

PEM: Even without hedge fund registration, are you looking at addressing how public pension funds invest in hedge funds?
BF: One area of the hedge funds industry that does concern me is the level of public pension funds that are invested in hedge funds. I want to look into this to see if public pension funds are adequately protected. But again, we are in the information-gathering stage.

PEM: Is registration among the possible initiatives?
BF: I can't answer this until we have our hearings?with no predisposition one way or the other?and take a comprehensive look at the industry.

PEM: When will hearings occur?
BF: The schedule of the committee has not been set yet, but sometime during 2007 is likely.