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From Kirsten Bischoff, Opalesque New York:

The hedge fund industry has suffered an image problem based mostly on the actions of a small fraction of managers. However, the same credit crisis that helped uncover the actions of a few fraudulent hedge fund managers, may also have served to highlight the important and supportive role hedge funds play in the financial markets.

During the liquidity crisis, when banks were refusing to lend, hedge funds were providing much of the access to cash that small businesses needed. The important role that hedge funds have played in providing credit to small businesses was highlighted last week when hedge fund Baupost Group (possibly to be joined soon by Fortress Investment Group) was part of the team of private capital that helped rescue small business lender CIT Group.

It is highly unlikely that hedge fund regulation will be allowed to put US firms at a competitive disadvantage against foreign competitors, Andrew Weiss, Chairman of Boston-based firm Weiss Asset Management said in a statement today after a meeting with Congressman and Chairman of the House Financial Services Committee Barney Frank. Weiss also said that it was unlikely that hedge funds would be subject to the same rules as those that currently govern mutual funds.

Regulation of hedge funds has been at the forefront of discussions as the US regulators look to overhaul regulation of the entire financial in......................

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