Talk to a roomful of hedge fund managers about what will
come out of Washington next and many will express genuine
alarm. The perception is that Congress, in its zeal to crack
down on mutual fund abuses, will crack down hard on hedge funds
as well. In the wake of the market-timing scandal, some fear
that Congress will force mutual funds to divest their hedge
funds, or even worse.
Much of this concern has been massively exaggerated. Here's
a reality check: the mutual fund scandal will probably leave
hedge funds largely unscathed. Congress has rightly targeted
mutual funds. Their clear priority is to protect the nest eggs
of middle-class Americans, not the fat cats who own hedge
funds. Congress is currently focused on just one very limited
provision that falls at the intersection of the two industries
that could well be enacted into law. This provision is
eminently sensible and...