The panel Congress created to review the financial markets and regulatory system, following the passage of the $700 billion bank bailout bill last fall, has come out in favor of greater regulation of hedge funds.
In its initial report released Thursday, the Congressional Oversight Panel called for greater oversight of the financial industry, especially the “shadow banking system” that it defines to include hedge funds, among others.
“Why does regulation matter? If we had had better regulation we could have prevented the mess we are in today. Good regulation has the power to channel investment into productive economic activity, to make markets safer, and to prevent financial meltdowns,” said Elizabeth Warren, chair of the panel. “We are at a crucial...