Text Timeline

Text Timeline
Graphical Timeline

00:00:10	Unidentified Speaker, - RETURN TO OUR HISTORICAL PROGRAMMING ON SENATOR JOSEPH McCARTHY IMMEDIATELY AFTER THIS HEARING ENDS. >> THE COLLAPSE OF LEHMAN BROTHERS AND AIG. WE...
00:00:37	Waxman, Henry - U.S. Representative, [D] California WE LEARNED ABOUT THE COLOSSAL FAILURES OF THESE GATE KEEPERS OF THE FINANCIAL MARKETS. AS ONE INTERNAL DOCUMENT SAID, QUOTE, WE SOLD OUR SOUL TO THE...
00:05:05	Davis, Thomas "Tom" M. - U.S. Representative, [R] Virginia LAX LENDING STANDARDS, LOOSE MANAGEMENT, AGGRESSIVE LOBBYING AND LAVISH PERKS, SOME AT THE QUASI GOVERNMENTAL GIANTS THAT DOMINATED THE MARKET, FANNIE...
00:09:01	Waxman, Henry - U.S. Representative, [D] California AT THE MASSACHUSETTS INSTITUTE OF TECHNOLOGIES SLOAN SCHOOL OF MANAGEMENT. PROFESSOR JOSEPH BANKMAN IS THE RALPH M. PARSENS PROFESSOR OF LAW AND BUSINESS...
00:10:54	Ruder, David S. - Chairman FORMATION, MARKET LIQUIDITY, PRICE DISCOVERY, AND MARKET EFFICIENCY. HEDGE FUNDS, HOWEVER, MAY POSE RISKS TO INVESTORS AND TO THE FINANCIAL MARKETS....
00:16:25	Maloney, Carolyn - U.S. Representative, [D] New York COMMITTEE THAT IN ADDITION TO MY FACULTY POSITION AT MIT, I'M ALSO AFFILIATED WITH A COMPANY THAT HANDLES HEDGE
00:16:32	Lo, Andrew - Director FUNDS AND MUTUAL FUNDS. I'LL KEEP MY INTRODUCTORY REMARKS BRIEF. OVER THE PAST TEN YEARS, MUCH OF MY RESEARCH AT MIT HAS BEEN FOCUS ON HEDGE FUND...
00:17:06	Lynch, Stephen F. - U.S. Representative, [D] Massachusetts SUBJECT. BUT THE EVENTS OF AUGUST, 1998, THE COLLAPSE AND OTHER HEDGE FUNDS THAT YEAR SHOWED PRETTY
00:17:12	Unidentified Speaker, - CLEARLY THAT THE HEDGE FUND INDUSTRY DOES HAVE AN IMPACT ON WHAT WE
00:17:17	Lo, Andrew - Director THINK OF AS SYSTEMIC RISK. SINCE THEN, THE HEDGE FUND INDUSTRY HAS GROWN BIG AND IT HAS BECOME EVEN MORE IMPORTANT FOR THE GROWTH AND OPERATIONS OF...
00:22:04	Bankman, Joseph - Professor ALSO INCLUDE PRIVATE EQUITY FUND COMPENSATION AGREEMENTS AND TAX BENEFITS SINCE THEY'RE QUITE SIMILAR. MANAGERS IN BOTH THESE FIELDS RECEIVE A MANAGEMENT...
00:26:54	Shadab, Houman - Senior Research Fellow WORKING GROUP. THE MERCATUS CENTER IS A UNIVERSITY BASED EDUCATION OUTREACH AND RESEARCH ORGANIZATION WITH GEORGE MASON UNIVERSITY. MY OWN RESEARCH FOCUS...
00:32:07	Maloney, Carolyn - U.S. Representative, [D] New York HEDGE FUNDS MAY HAVE AFFECTED AND CONTRIBUTED TO THIS CRISIS. SINCE SEPTEMBER, HEDGE FUNDS HAVE FACED A MASSIVE INCREASE IN WITHDRAWALS FROM THEIR INVESTORS....
00:33:35	Ruder, David S. - Chairman THOSE ASSETS AS WELL. I KNOW IT IS HAPPENING. I REGARD THAT ASPECT OF IT TO BE A RATHER NATURAL EFFECT COMING FROM THE CREDIT CRISIS ITSELF. >> AND...
00:34:09	Maloney, Carolyn - U.S. Representative, [D] New York IT MAY NOT REQUIRE ANY DIRECT OVERSIGHT. >>
00:34:11	Lo, Andrew - Director OKAY. MARKET ANALYST JEFF BAGGILY ESTIMATED THAT HEDGE FUNDS MAY BE FORCED TO SELL HALF A TRILLION DOLLARS WORTH OF ASSETS AS A RESULT OF THIS FINANCIAL...
00:34:33	Maloney, Carolyn - U.S. Representative, [D] New York MARKETS. WHAT WE NEED TO KNOW IN ADVANCE IS WHAT ARE THESE POSITIONS SO THAT THE FINANCIAL REGULATORS CAN HAVE SOME WAY OF ATTACKING THE PROBLEM OF THE...
00:34:50	Ruder, David S. - Chairman NEED FOR MORE TRANSPARENCY? >> I CERTAINLY AGREE WITH THAT. >> AND PROFESSOR LO, A RECENT REPORT BY THE ORGANIZATION FOR ECONOMIC COOPERATION AND...
00:35:10	Maloney, Carolyn - U.S. Representative, [D] New York SELL THE SUBPRIME
00:35:12	Ruder, David S. - Chairman MORTGAGES TO INVESTORS THAT ARE AT THE ROOT
00:35:14	Maloney, Carolyn - U.S. Representative, [D] New York OF THIS CRISIS BEFORE US. WHAT IMPACTS DO THESE INVESTMENTS HAVE ON THE FINANCIAL CRISIS AND DID HEDGE FUNDS FACILITATE THE GROWTH OF THE MARKET FOR...
00:35:49	Lo, Andrew - Director PROVIDE A VALUABLE SERVICE. HOWEVER, ON THE DOWNSIDE, WHEN THESE PARTICULAR RISKY ASSETS END UP LOSING GREAT SUMS OF MONEY, HEDGE FUNDS ARE PUT UNDER...
00:36:28	Maloney, Carolyn - U.S. Representative, [D] New York INVESTMENT BANKS LEFT TO BUY UP HEDGE FUNDS IF THEY FAIL AND ARE CAUSING SYSTEMIC RISK IN OUR FINANCIAL MARKETS. AND WOULD ANYONE LIKE TO COMMENT ON...
00:37:05	Lo, Andrew - Director LOOKS LIKE UNLESS WE HAVE MORE TRANSPARENCY INTO THE HEDGE FUND INDUSTRY. WITH THAT ADDITIONAL TRANSPARENCY, WE CAN DEVELOP A SENSE OF WHAT EXACTLY...
00:37:37	Maloney, Carolyn - U.S. Representative, [D] New York BE PLEASED TO EXPAND ON THAT, CONGRESSMAN DAVIS. THERE OUGHT TO BE SOME
00:37:42	Davis, Thomas "Tom" M. - U.S. Representative, [R] Virginia WAY IN WHICH THE AGGREGATE RISK POSITIONS OF THE HEDGE FUNDS AND THE RISK POSITIONS OF THEIR COUNTERPARTIES ARE REVEALED TO A CENTRAL REGULATOR. I...
00:37:55	Unidentified Speaker, - IT IS I IOSSISIE FOR THAT CENTNTL REGULULOR TO TAKE
00:37:58	Ruder, David S. - Chairman ADEQUATETE STETEPS TO FORESTSTALL CALAMITIESITHOUTUT HAVING THAT INFORMATION. SO T FIRIRST STEP HAS TO BE INSPECTION SYSTEM, AND ASSESSME S SYSTEM...
00:38:50	Davis, Thomas "Tom" M. - U.S. Representative, [R] Virginia I BELIEVE THAT A GREAT DEAL OF THE PROBLEMS THAT WE HAVE BEEN
00:38:53	Lo, Andrew - Director FACING WILL TAKE CARE OF THEMSELVES TO A LARGE DEGREE. HOWEVER, THERE IS NO MECHANISM CURRENTLY FOR THAT INFORMATION TO BE PROVIDED TO THE PUBLIC OR...
00:39:35	Davis, Thomas "Tom" M. - U.S. Representative, [R] Virginia GATHERING THEM IN A CENTER LIFE SOURCE AND THEN MAKING DECISIONS ON THAT BASIS. THE PROBLEM WITH THAT PERSPECTIVE
00:39:41	Bankman, Joseph - Professor IS THAT THE RISK THAT HEDGE FUNDS AND THEIR COUNTERPARTIES POSE
00:39:45	Davis, Thomas "Tom" M. - U.S. Representative, [R] Virginia TO THEIR ECONOMY ARE
00:39:47	Shadab, Houman - Senior Research Fellow A, VERY HIGHLY COMPLEX, AND, B, CONSTANTLY CHANGING. IN 2006, FEDERAL RESERVE CHAIRMAN BEN BERNANKE REJECTED A PROPOSAL TO CREATE A CENTRALIZED...
00:42:17	Davis, Thomas "Tom" M. - U.S. Representative, [R] Virginia 46% OF ALL CBOs, 70% OF 9 THE MOST RISKY PORTIONS OF THESE VEHICLES. BUT IN YOUR TESTIMONY, YOU ESTIMATE THE HEDGE FUNDS NEVER HAD MORE THAN 29% OF...
00:43:01	Shadab, Houman - Senior Research Fellow FUNDS AND INSURANCE COMPANIES TO BE ABLE TO INVEST UNDER CERTAIN CLASS OF SECURITY THAT HAS A CERTAIN SAFETY RATING BUT GIVES THEM A HIGHER GRADE. HEDGE...
00:44:06	Maloney, Carolyn - U.S. Representative, [D] New York AMERICANS WHO MAKE LESS MONEY. IF I UNDERSTAND YOUR TESTIMONY CORRECTLY, THE EARNINGS OF A HEDGE FUND MANAGERS ARE CALLED CARRY INTEREST IS, THAT CORRECT?...
00:44:16	Cummings, Elijah - U.S. Representative, [D] Maryland THAT'S RIGHT. >> AND TO THE EXTENT THAT THESE EARNINGS WESTBOUND TIED TO LONG-TERM GAINS, THE TAX RATE IS JUST 15%, IS THAT RIGHT? >> THAT'S RIGHT....
00:44:37	Bankman, Joseph - Professor SOME OTHER WORKING
00:44:39	Cummings, Elijah - U.S. Representative, [D] Maryland AMERICANS, VERY HARDWORKING AMERICANS. THE BUREAU OF LABOR STATISTICS HAS CALCULATED THE EARNINGS FOR AMERICANS IN THE WORKFORCE. THE MEDIAN EARNINGS...
00:44:50	Bankman, Joseph - Professor SCHOOLTEACHERS
00:44:51	Cummings, Elijah - U.S. Representative, [D] Maryland WERE $43,000 TO $49,000 PER YEAR. WHAT IS THE TAX RATE FOR A SCHOOLTEACHER WITH THAT INCOME? >> WELL, IT DEPENDS ON THEIR MARITAL STATUS, BUT IF THEY'RE...
00:45:21	Bankman, Joseph - Professor 40% HIGHER RATE, THAT IS 25% COMPARED TO 15%. >> JESUS CHRIST. THE MEDIAN FOR A FIREFIGHTER IS $45,000 TO $90,000. THEIR TAX RATE WOULD BE AROUND THE...
00:45:52	Cummings, Elijah - U.S. Representative, [D] Maryland AN HOUR, THAT'S ABOUT $41,000 A YEAR. THAT'S ALSO TAXED ABOUT AT THE 25% RATE, IS 4HAT RIGHT? >> THAT WOULD BE RIGHT. OF COURSE, THERE MAY BE
00:46:03	Bankman, Joseph - Professor DEDUCTIONS FROM THAT, TOO. SO WE
00:46:05	Cummings, Elijah - U.S. Representative, [D] Maryland MAY BE SLIGHTLY OVERSTATING THE RATE ON SOME OF THOSE CASES. >> WELL, LET ME ASK YOU THIS WAY. SO JOE THE PLUMBER IS BEING TAXED AT A HIGHER RATE THAN...
00:46:21	Bankman, Joseph - Professor WERE JOE THE FUND MANAGER. THE INVESTMENT MANAGERS ACTUALLY DON'T GET THAT BREAK. >> SO THE FUND MANAGER. >> YES. >> ALL RIGHT. NOW,
00:46:29	Cummings, Elijah - U.S. Representative, [D] Maryland PROFESSOR, DOES THIS SEEM FAIR TO YOU? >> NO. >> ON THE AVERAGE, THE WITNESSES ON THE NEXT PANEL MADE OVER $1 BILLION -- $1 BILLION IN
00:46:41	Bankman, Joseph - Professor 2007 -- YET SOME PORTION OF THEIR EARNINGS IS BEING TAXED AT JUST
00:46:46	Unidentified Speaker, - A 15% RATE. IS THAT
00:46:48	Cummings, Elijah - U.S. Representative, [D] Maryland FAIR? >> NO, I DON'T BELIEVE THAT'S EITHER FAIR OR
00:46:51	Bankman, Joseph - Professor EFFICIENT. >> AND WHY DO
00:46:53	Cummings, Elijah - U.S. Representative, [D] Maryland YOU SAY THAT? LET'S CONCENTRATE ON THE WORD EFFICIENT. WHY DO YOU SAY IT'S NOT EFFICIENT? >> WELL, A FUNDAMENTAL GOAL OF TAX POLICY IS TO TRY TO TAX...
00:47:09	Bankman, Joseph - Professor SO IT'S INEFFICIENT TO GET A
00:47:13	Cummings, Elijah - U.S. Representative, [D] Maryland TAX BREAK TO ONE OCCUPATION AS OPPOSED TO ANOTHER. WE UGT TO START
00:47:19	Bankman, Joseph - Professor THEM OFF AT A RATE. WE COULD DEBATE WHAT THAT APPROPRIATE RATE IS, BUT NO ONE IS OFFERED A REASON WHY THIS ONE SLICE OF HIGHLY PAID PROFESSIONALS...
00:47:55	Cummings, Elijah - U.S. Representative, [D] Maryland FROM THE RATES SPECIAL, BUT DOES GIVE A LITTLE BIT OF AN EXPLANATION HOW WE TO SOME EXTENT SLIPPED INTO A SITUATION WHERE SO MANY OF OUR MOST HIGHLY PAID...
00:48:10	Bankman, Joseph - Professor CONGRESS, THE HOUSE TWICE VOTED TO CLOSE THIS LOOPHOLE AND WOULD HAVE GENERATED MORE THAN $30 BILLION IN TAX SAVINGS ACCORDING TO THE CONGRESSIONAL...
00:48:30	Cummings, Elijah - U.S. Representative, [D] Maryland YEAR. WOULD YOU AGREE? >> YES. >> MY TIME IS UP. I YIELD BACK. >> THANK YOU, MADAM CHAIR. WELCOME ALL OF YOU TO THE WAYS AND MEANS COMMITTEE. IT'S...
00:48:57	Bankman, Joseph - Professor CONGRESS. I'M A
00:48:58	Cummings, Elijah - U.S. Representative, [D] Maryland MEMBER OF CONGRESS WHO HAS GOT MY CAPITAL GAINS TREATMENT
00:49:03	Issa, Darrell - U.S. Representative, [R] California UNDER THE OLD TAX LAW WHEN I SOLD SOLD MY BUSINESS AND CAME TO CONGRESS. SO I DIDN'T GET THE 15% AND I DID PAY 10% OR SO TO THE STATE OF CALIFORNIA...
00:50:12	Unidentified Speaker, - ISN'T IT TRUE IF A DOCTOR FORMS A MEDICAL PRACTICE AND BUILDS IT UP AND SELLS IT, HE GETS CAPITAL GAINS TREATMENT? >> THAT'S RIGHT. >> OKAY. SO THE...
00:50:39	Bankman, Joseph - Professor INCOME TAXED
00:50:40	Issa, Darrell - U.S. Representative, [R] California AT ORDINARY INCOME RATES AND THE VERY OCCASIONAL CAPITAL GAINS HE RECOGNIZES. >> I APPRECIATE YOUR RECOGNITION ON THAT. AND LOOK, I'M ONE OF THE PEOPLE...
00:50:56	Bankman, Joseph - Professor WHETHER OR NOT THAT SHOULD BE LONG TERM OR SHORT. I HAVE NO PROBLEM LOOKING AT IT, BUT OF COURSE, I'M NOT ON THE WAYS AND MEANS COMMITTEE NORMALLY...
00:51:09	Issa, Darrell - U.S. Representative, [R] California BANKMAN, THANK YOU FOR SUPPORTING THE FLAT TAX. I APPRECIATE WE SHOULD ALL BE TAXED AT THE SAME RATE AND SHOULDN'T USE TAX RATE TO MANIPULATE THE ECONOMY....
00:52:34	Ruder, David S. - Chairman MILLION. IF THERE'S LESS THAN $25 MILLION UNDER MANAGEMENT, IT'S NOT REGULATED BY THE SEC. I WOULD SUPPORT THAT KIND OF DISTINCTION. IT'S JUST A MATTER...
00:52:44	Issa, Darrell - U.S. Representative, [R] California WHAT THE NUMBER
00:52:45	Ruder, David S. - Chairman IS. IS IT $25 MILLION? $100 MILLION? ONE HAS TO COME TO SOME CONCLUSION ABOUT THAT. >> I APPRECIATE THAT. I THINK YOU'RE RIGHT WE DO HAVE TO -- IF...
00:53:10	Issa, Darrell - U.S. Representative, [R] California THAT EDGE HEDGE FUNDS NORMALLY HEDGE, IF YOU WILL, LONG AND SHORT AND WHEN THEY UNWIND, THEY TEND TO UNWIND MORE NEUTRAL THAN ANY OTHER LONG-ONLY INVESTMENTS?...
00:53:42	Shadab, Houman - Senior Research Fellow
00:53:43	Issa, Darrell - U.S. Representative, [R] California YES. >> WE PARTIALLY BUILT UP A STRATEGY OF MOST MUTUAL FUNDS NOT ABLE TO GO TO ALL CASH, NOT BEING ABLE TO LEAVE A CERTAIN PARADIGM THAT THEY'RE IN AND...
00:54:03	Shadab, Houman - Senior Research Fellow HEDGE FUND IS OFTEN THE WAY, IF
00:54:06	Issa, Darrell - U.S. Representative, [R] California YOU'RE A BIG INVESTOR LIKE A UNION PENSION PLAN, YOU HEDGE AGAINST FUNDS THAT ARE 100% LONG. >> THANK YOU VERY MUCH CONGRESSMANTIVE ERNEY. >> I WANT TO...
00:54:39	Maloney, Carolyn - U.S. Representative, [D] New York GO UNDER.
00:54:43	Tierney, John - U.S. Representative, [D] Massachusetts 9,000 ADDITIONAL HEALTH FUNDS, A GOOD HEALTHY PERCENTAGE OF THEM ARE GOING YOU SHOULD. WHAT WOULD BE THE POTENTIAL IMPACTS OF THE COLLAPSE OF THAT...
00:55:13	Lo, Andrew - Director LARGE HEDGE FUNDS THAT HAVE A VARIETY OF DIFFERENT COUNTERPARTY RELATIONSHIPS THAT COULD CAUSE SOME MARKET DISLOCATION AND THAT'S THE PURPOSE OF TRANSPARENCY,...
00:55:49	Tierney, John - U.S. Representative, [D] Massachusetts IN THIS, WHETHER THEY KNOW IT OR NOT. RETIREES, STUDENTS. COULD BE MILLIONS OF OTHER CITIZENS GETTING AFFECTED BY THAT. SO TELL ME WHAT THE IMPACT IS...
00:57:11	Unidentified Speaker, - ARE. IS THAT CORRECT? >> THAT'S RIGHT. LET THE BUYER OR THE INVESTOR BEWARE. >> SO HERE YOU HAVE A PENSION FUND INVESTING IN A HEDGE FUND, NOT ONLY...
00:57:21	Lo, Andrew - Director MANAGING THE PENSION FUND UNAWARE,
00:57:23	Tierney, John - U.S. Representative, [D] Massachusetts BUT CERTAINLY THE INVESTORS ARE TOTALLY UNAWARE. DO YOU THINK THAT CONTINUES TO HOLD AS A GOOD POLICY, OR DO YOU THINK THERE OUGHT TO BE MORE TRANSPARENCY
00:57:32	Lo, Andrew - Director TO THE INVESTORS FROM THE MANAGERS OF THESE HEDGE FUNDS? >> FOR
00:57:36	Tierney, John - U.S. Representative, [D] Massachusetts THE MOST PART, INVESTORS WOULD PROBABLY NOT BE ABLE TO MAKE USE OF THE KIND OF TRANSPARENCY I'M PROPOSING TO THE REGULATORS. MOST INVESTORS DELEGATE...
00:57:56	Lo, Andrew - Director MANAGERS. SO MANAGERS AND THE ULTIMATE INSTITUTIONAL INVESTORS WOULD HAVE THE RESPONSIBILITY TO MONITOR THOSE KINDS OF RISKS AND THE REGULATORS WOULD...
00:58:30	Tierney, John - U.S. Representative, [D] Massachusetts COME. >> DOES ANYONE ON THE PANEL RECOMMEND STRONGER INTERVENTION ON BEHALF OF PENSIONERS THAT ARE BEING INVESTED IN HEDGE FUNDS AND MAY STAND THE
00:58:39	Lo, Andrew - Director PROSPECT OF LOSING SIGNIFICANT AMOUNTS OF MONIES IF A LARGER PORTION OF HEDGE FUND GOES UNDER AS SOME HAVE PREDICTED? >> I WOULD JUST LIKE TO SAY THAT...
00:58:52	Tierney, John - U.S. Representative, [D] Massachusetts UNHEARD OF FOR HEDGE FUNDS NOT TO MAKE SUBSTANTIAL DISCLOSURES TO THEIR INVESTORS, ESPECIALLY WHEN THEY ARE INSTITUTIONS LIKE PENSION FUNDS. HEDGE...
00:59:09	Shadab, Houman - Senior Research Fellow DISCLOSURES. IN FACT, MORE DISCLOSURES AND HIGHER QUALITY AND MORE EASILY UNDERSTANDABLE DISCLOSURES THAN MUTUAL FUNDS MAKE TO THEIR INVESTORS. IT'S...
00:59:46	Tierney, John - U.S. Representative, [D] Massachusetts TO INVESTORS AND IN MANY CASES THAT SS THAT'S WHY MANAGER DECIDE TO LANCH HEDGE FUNDS INSTEAD OF MUTUAL FUNDS TO PROTECT THEIR PROPRIETARY INFORMATION....
01:00:00	Lo, Andrew - Director STATEMENT THEN YOUR TIME HAS EXPIRED. >> I HAVE ONE MORE QUESTION ABOUT PENSION FUNDS. ONE ISSUE WE HAVEN'T TALKED ABOUT TODAY IS THE IMPACT OF POTENTIAL...
01:00:20	Maloney, Carolyn - U.S. Representative, [D] New York SIGNIFICANT LOSSES BECAUSE OF INTERNAL INVESTMENT POLL SPIPS THAT MIGHT HAVE
01:00:24	Lo, Andrew - Director HAMPERED THEIR ABILITIES TO MAKE GOOD ON THESE GUARANTEES. THAT'S AN ISSUE WE NEED TO CONSIDER. >> THANK YOU VERY MUCH. >> I WOULD LIKE TO FOLLOW UP...
01:00:53	Maloney, Carolyn - U.S. Representative, [D] New York YIELD WAS DISCONNECTED FROM THE RISK? IN OTHER
01:00:56	Souder, Mark Edward - U.S. Representative, [R] Indiana WORDS, ISN'T IT -- HAS THE MARKETS ACCURATELY REFLECTED THAT WHENEVER YOU GOT A HIGHER YIELD, YOU TOOK MORE RISK? >> THAT'S TYPICALLY BEEN THE CASE,...
01:01:24	Unidentified Speaker, - THAT'S RIGHT. >> IF YOU'RE A DOCTOR OR A LAWYER AND YOU'RE INVESTING IN A FUND THAT WASN'T VERY TRANSPARENT, I THINK YOU WOULD ASSUME IN A LOGICAL...
01:01:39	Lo, Andrew - Director
01:01:40	Souder, Mark Edward - U.S. Representative, [R] Indiana MORE RISK. >> YOU SHOULD, THAT'S CORRECT. >> WHAT BECOMES FUNDAMENTAL HERE AND UNDERSTAND I VOTED FOR BOTH VERSIONS OF THE RESCUE PACKAGE, BUT THERE'S...
01:01:49	Lo, Andrew - Director IN MY DISTRICT IN
01:01:50	Souder, Mark Edward - U.S. Representative, [R] Indiana INDIANA WHICH IS RELATIVELY CONSERVATIVE, AND AS WE SEE OTHER PARTS OF THE STRUGGLING WHERE THEY GOT GREAT REWARDS AND ARE NOW GETTING PENALIZED AND...
01:02:01	Lo, Andrew - Director
01:02:03	Souder, Mark Edward - U.S. Representative, [R] Indiana BECAUSE THEY DON'T WANT TO ASSUME THE RISK. IN YOUR WRITTEN COMMENTS, YOU MORE OR LESS COMPARE, YOU SAY PEOPLE HAVE A PROPENSITY TO IRRESPONSIBLE BEHAVIOR,...
01:03:26	Lo, Andrew - Director SECURITIZATION OF THE MORTGAGE MARKETS IS WHAT HAPPENED IN THE CREDIT MARKETS? >> YES. >> IN YOUR DISCUSSION OF RISK AND WH YOU JUST SAID IN RESPONSE...
01:03:45	Souder, Mark Edward - U.S. Representative, [R] Indiana WERE GETTING RISK AND THEIR ABILITY TO ABSORB RISK SUDDENLY FOUND RISK. THE QUESTION THERE IS, WHERE WERE THE PENSION MANAGERS? IN OTHER WORDS, PART...
01:03:54	Lo, Andrew - Director THE DEBATE HERE
01:03:55	Souder, Mark Edward - U.S. Representative, [R] Indiana IS HOW MUCH DOES GOVERNMENT PROVIDE THE REGULATION, AND, I HAVE A BUSINESS DEGREE AND A MANAGEMENT DEGREE. AND THE MORE WE HAVE THESE HEARINGS, THE...
01:04:45	Lo, Andrew - Director DOUBLES IN GROWTH. THAT ANYBODY IN ELEMENTARY COULD SEE THAT AS YOU EXTENDED
01:04:53	Souder, Mark Edward - U.S. Representative, [R] Indiana TO SIX PACKS AND DIFFERENT TRANCHES. THE FARTHER OUT YOU GO, GO CHECK YOUR BASE. NO MANAGEMENT WOULD SAY THAT AS YOU'RE DOING MORE OVERSEAS RISKY INVESTMENT,...
01:05:59	Lo, Andrew - Director MUCH. CONGRESSMAN LYNCH? >> THANK YOU. JUST A QUICK COMMENT. I KNOW WE'RE TRYING TO TAKE COMPARISONS TO THE
01:06:20	Maloney, Carolyn - U.S. Representative, [D] New York AMARANTH COLLAPSE AND IT'S DIFFICULT TO MAKE A BROAD PROJECTION FROM A COUPLE EXAMPLES. BUT THE COLLAPSE WAS SIMPLIFIED IN SOME DEGREE BY THE FACT...
01:06:29	Lynch, Stephen F. - U.S. Representative, [D] Massachusetts IT WAS LARGELY AN EFFORT TO CORNER THE MARKET ON ONE COMMODITY, NATURAL GAS. WHEREAS -- AND FORTUNATELY IT WAS A GOOD TIME IN THE MARKET AND YOU'RE...
01:08:48	Ruder, David S. - Chairman WHERE THE SYSTEMIC RISK PROBLEMS ARE. IT MIGHT ALSO BE ABLE TO IDENTIFY THE LONG-TERM CAPITAL MANAGEMENT TWIN IN WHICH TLER THERE'S A SINGLE HEDGE...
01:09:25	Lo, Andrew - Director THAT HEDGE FUNDS, BECAUSE THEY TAKE ON THESE EXTRAORDINARY RISKS, PROVIDE A VALUABLE SERVICE, BUT THEN THOSE RISKS END UP CAUSING GREAT LOSSES, THEY COULD...
01:10:05	Shadab, Houman - Senior Research Fellow ASSETS OFF THEIR BOOKS WE WOULDN'T HAVE THE CORE CRISIS HAPPENING, THE BANKING SYSTEM IS SO IMPORTANT FOR THE ENTIRE ECONOMY HAPPENING IN THE WAY WE...
01:11:08	Lynch, Stephen F. - U.S. Representative, [D] Massachusetts NTSB USUALLY COMES IN AND DOES ACCIDENT RETRUX CONSTRUCTION. THEY'RE NOT VERY GOOD PROACTIVELY, BUT THEY'RE EXCELLENT IN FORENSICALLY TELLING...
01:11:19	Shadab, Houman - Senior Research Fellow HAPPENED. BUT I'M OUT OF TIME. BUT AT SOME POINT, I WOULD LIKE TO HEAR YOUR
01:11:22	Lynch, Stephen F. - U.S. Representative, [D] Massachusetts THOUGHTS ON HOW THAT WHOULD ACTUALLY OPERATE. I THANK ALL OF THE WITNESSES FOR YOUR TESTIMONY TODAY. >> THANK YOU, CONGRESSMAN LYNCH. AND IF PROFESSOR...
01:11:51	Maloney, Carolyn - U.S. Representative, [D] New York BLOW-UPS. YOU'RE RIGHT, WHILE THE NTSB DOES NOT HAVE ANY OVERSIGHT RESPONSIBILITY, THE FAA CONTROLS ISSUES REGARDING
01:11:59	Lo, Andrew - Director AIRLINE SAFETY, THE FACT IS BY PUBLISHING A PUBLICLY AVAILABLE REPORT THAT DESCRIBES THE DETAILS OF VARIOUS ACCIDENTS, THE PUBLIC LEARNS AN ENORMOUS...
01:12:40	Maloney, Carolyn - U.S. Representative, [D] New York ACTIVITIES. FROM A PRACTICAL PERSPECTIVE IS, THERE A DIFFERENCE BETWEEN
01:12:44	Lynch, Stephen F. - U.S. Representative, [D] Massachusetts WHAT ANY OF THESE, OUR NEXT PANEL OF WITNESSES CAN DO AND WHAT A HEDGE FUND CAN DO? >> THEY CAN
01:12:52	Yarmuth, John - U.S. Representative, [D] Kentucky DO AS INDIVIDUALS WHAT A HEDGE FUND CAN DO?THEY CAN DO AS INDIVIDUALS WHAT A HEDGE FUND CAN DO?THEY CAN DO AS INDIVIDUALS WHAT A HEDGE FUND CAN DO?THEY...
01:13:12	Unidentified Speaker, - BLOOMBERG WITH BILLIONS OF DOLLARS. >> WITH THEIR OWN PERSONAL WEALTH, I DON'T THINK THERE'S ANYTHING THAT PREVENTS THEM FROM DOING THE SAME THING....
01:13:21	Shadab, Houman - Senior Research Fellow DANGER
01:13:23	Yarmuth, John - U.S. Representative, [D] Kentucky OF REGULATING HEDGE FUNDS BECAUSE THEY WOULD LOSE THEIR UNIQUE BENEFITS, WHY DOES IT PRESENT A UNIQUE BENEFIT WHEN ANY INDIVIDUAL WITH A LOT OF MONEY...
01:13:34	Shadab, Houman - Senior Research Fellow THEIR OWN PERSONAL WEALTH BUTPULL IT FROM OTHERS. SURE THERE ARE EXCEPTIONS WHEN YOU HAVE HEDGE
01:13:41	Yarmuth, John - U.S. Representative, [D] Kentucky FUND MANAGERS WHO ACCUMULATED THEIR OWN LARGE WEALTH AND THEY CAN RUN THEIR OWN HEDGE FUND WITHOUT HAVING TO GO TO OTHER INVESTORS.
01:13:52	Shadab, Houman - Senior Research Fellow BUT TYPICALLY A HEDGE FUND MANAGER WILL NEED THE WEALTH OF OTHERS. >> WHEN YOU MENTIONED THE SOCIETAL BENEFITS OF HEDGE FUND MANAGERS, THAT'S REALLY...
01:14:18	Yarmuth, John - U.S. Representative, [D] Kentucky I WOULD SAY UNLIKELY THAT'S THE CASE, CORRECT. >> SO IF WE'RE WORRIED ABOUT THE IMPACT, WHETHER OR NOT AS PROFESSOR RUDER DESCRIBED WE CAN DEFINITIVELY...
01:14:34	Shadab, Houman - Senior Research Fellow SYSTEMIC BENEFIT
01:14:37	Yarmuth, John - U.S. Representative, [D] Kentucky OF HEDGE FUNDS, IT SEEMS TO ME
01:14:39	Shadab, Houman - Senior Research Fellow EITHER,
01:14:43	Yarmuth, John - U.S. Representative, [D] Kentucky CAN WE? >> WE COULD BY AGGREGATING INFORMATION KNOW AS A GROUP WHERE THEY'RE HEADED AND BE ABLE TO FIND OUT WHERE THEY'RE HEDGING AND WHAT THEY'RE DOING....
01:15:07	Ruder, David S. - Chairman CONCLUSIONS AND TAKE SOME ACTION. AND MAY ALSO EVEN BE ABLE TO ISSUE PUBLIC STATEMENTS WHICH WOULD HELP THE PUBLIC KNOW WHAT'S GOING ON. >> I HAVE...
01:15:39	Yarmuth, John - U.S. Representative, [D] Kentucky DISRUPT THE MARKET. SO IS THAT REALLY WHAT WE'RE TALKING ABOUT? A DISTINCTION WITHOUT A DIFFERENCE? >> I THINK AGGREGATION OF ASSETS IN A WAY THAT...
01:16:09	Ruder, David S. - Chairman ABOUT TOO BIG TO FAIL IN THE SENSE THAT WE FIND A HEDGE FUND THAT'S GOING TO THAL THAT WE RUN IN TO BAIL IT OUT. I THINK WE NEED TO KNOW WHAT THE AFFECTS...
01:16:24	Yarmuth, John - U.S. Representative, [D] Kentucky YOU. THAT'S WHY I'M ASKING THIS SERIES OF QUESTIONS. WHEN I READ THAT IN SOME
01:16:29	Ruder, David S. - Chairman CASES THAT ALL THE TRADES ON THE NEW YORK STOCK EXCHANGE, 5% OF ALL TRADES WERE CONTROLLED BY ONE TRADENER A PARTICULAR SESSION, THAT'S VERY DISTURBING...
01:16:42	Yarmuth, John - U.S. Representative, [D] Kentucky OF PROFESSOR BANKMAN. I HAVE A FRIEND WHO'S A PERSON TO DISCUSS THESE THINGS. HE WILL REMAIN NAMELESS. WHEN I TALKED ABOUT CARRIED INTEREST WITH HIM...
01:17:42	Bankman, Joseph - Professor THE ARGUMENTS THAT THE INDUSTRY GOING TO BE REORGANIZING THE PRESENT FORM OF INDUSTRY ORGANIZATION HAVE BEEN AROUND A LONG TIME. EVEN WHEN, BY THE WAY,...
01:18:36	Maloney, Carolyn - U.S. Representative, [D] New York BEEN IN, A KIND OF TO BE OR NOT TO BE. TO REGULATE OR NOT TO REGULATE,
01:18:41	Norton, Eleanor Holmes - Congressional Delegate, [D] District of Columbia THAT IS. TO SOMETHING WE DON'T HEAR A LOFT DISCUSSION ABOUT. IF YOU'RE GOING TO REGULATE, HOW DO YOU DO IT, NOT A LOT OF MEAT ON THOSE BONES. THERE...
01:19:54	Lo, Andrew - Director THAT. >> CHAIRMAN, IN YOUR TESTIMONY, YOU SUGGEST, OF COURSE, THE AGENCY YOU CHAIRED, THE SEC TO ESSENTIAL LY ESSENTIALLY REGISTER, HAVE HEDGE FUNDS...
01:20:20	Norton, Eleanor Holmes - Congressional Delegate, [D] District of Columbia SEC. HOW DO YOU THINK REGISTERING WITH THE SEC WOULD IMPROVE ITS ABILITY TO MONITOR AND -- THINK THIS CRISIS NOW -- WOULD HELP REDUCE THE SYSTEMIC...
01:21:07	Ruder, David S. - Chairman ADVISERS TO SEEK RISK MANAGEMENT INFORMATION. AND I WOULD EXPAND THAT INSPECTION POWER SO THEY WOULD BE ABLE TO GO INTO A HEDGE FUND ADVISER AND FIND...
01:22:16	Norton, Eleanor Holmes - Congressional Delegate, [D] District of Columbia NOT COME TO CONGRESS FOR NEW AUTHORITY. SOT SEC I TAKE IT HAS NO AUTHORITY NOW. NOT EVEN THE AUTHORITY UNDER THAT RULE. WHAT'S THE DIFFERENCE BETWEEN...
01:22:57	Ruder, David S. - Chairman THAT'S GOING TO TAKE CONGRESSIONAL ACTION. AND I THINK THE INSPECTION POWER OUGHT TO BE INCREASED SO THAT THEY ARE ABLE TO GET THE KIND OF RISK MANAGEMENT...
01:23:09	Norton, Eleanor Holmes - Congressional Delegate, [D] District of Columbia
01:23:11	Ruder, David S. - Chairman SOCIETY. >> DO YOU SEE THIS KIND OF MARRIAGE THAT COULD COME OUT OF LISTENING TO BOTH OF YOU THAT THE INFORMATION WOULD BE PASSED ON TO THE FEDERAL...
01:23:37	Norton, Eleanor Holmes - Congressional Delegate, [D] District of Columbia NORTON. THERE'S A DIFFERENT PURPOSE FOR REGISTRATION UNDER THE 40 ACT, WHICH IS INVESTOR PROTECTION. THAT'S A SEPARATE ISSUE FROM SYSTEMIC RISK. AND...
01:24:24	Unidentified Speaker, - BANKING SECTOR HAS DIFFERENT OBJECTIVES THAN THE
01:24:28	Lo, Andrew - Director SEC'S REGULATION OF THE SECURITIES SECTOR.
01:24:31	Ruder, David S. - Chairman THE BANKING SYSTEM IS -- BANKING REGULATORS ARE CONCERNED ABOUT SAFETY AND SOUNDNESS OF BANKS. THE SEC IS CONCERNED ABOUT THE CAPITAL MARKETS, AND THE...
01:25:13	Norton, Eleanor Holmes - Congressional Delegate, [D] District of Columbia POSSIBLE TO OBTAIN THAT, NOT NECESSARILY DIRECTLY
01:25:16	Lo, Andrew - Director FROM HEDGE FUNDS, BUT FROM THE PRIME BROKERS THAT HAVE ALL THE POSITIONS, ALL THE LEVERAGE AND ALL THE COUNTERPARTIES AMONG THE HEDGE FUNDS. SO IT...
01:25:48	Norton, Eleanor Holmes - Congressional Delegate, [D] District of Columbia FUNDS, SHOULDN'T THERE BE TRUTH IN ADVERTISING SO THAT THEY KNOW WHETHER IT'S A TRUE HEDGE FUND
01:25:53	Maloney, Carolyn - U.S. Representative, [D] New York OR WHETHER IT IS NOT HEDGING AT ALL
01:25:56	Cooper, James "Jim" Hayes Shofner - U.S. Representative, [D] Tennessee BUT, IN FACT, SPECULATING HEAVILY. AND SHOULDN'T PERHAPS SPECULATIVE FUNDS BE CALLED SPECULATIVE FUBDS.NDS. BUT THE CURRENT TRADE SECRETS, PENSION...
01:26:41	Lo, Andrew - Director OF LESS THAN TRUTH IN ADVERTISING. WHAT ABOUT VOLATILITY-ONLY STRATEGIES? THE ROLLER COASTERS WE'VE SEEN IN THE MARKET, 500-POINT SWINGS IN A DAY....
01:27:29	Unidentified Speaker, - NECESSARILY. IT DEPENDS UPON WHETHER THE UNDERLYING ECONOMICS JUSTIFIES IT. BUT IF YOU HAVE THE PROPER DISCLOSURE FOR INVESTORS, IF THEY'RE PREPARED...
01:27:42	Cooper, James "Jim" Hayes Shofner - U.S. Representative, [D] Tennessee BE THE LONGEST WORD IN THE ENGLISH LANGUAGE. WHAT ABOUT WANNABE HEDGE
01:27:49	Lo, Andrew - Director FUND MANAGERS, LARGE COMMERCIAL BANKS WHO GET ENOUGH LEEWAY TO PRETEND THEY'RE HEDGE FUND MANAGERS. HOW SIGNIFICANT OF A SECTOR WOULD THIS BE AND...
01:28:04	Cooper, James "Jim" Hayes Shofner - U.S. Representative, [D] Tennessee A DANGER, BUT HOPEFULLY OVER TIME THAT MANAGERS GET WEEDED OUT AND THE PROCESS OF HEDGE FUNDS CLOSING AND NOW HEDGE FUNDS RISING DISCLOSES THAT...
01:28:24	Lo, Andrew - Director IS SO GREAT SOMETIMES YOU CAN LOOK THE OTHER WAY. THE OPERATIONS ARE SO FAST THAT SOMETIMES YOU DON'T KNOW WHAT PIECE BEING DONE. >> AGREE PD . >> IS...
01:28:44	Cooper, James "Jim" Hayes Shofner - U.S. Representative, [D] Tennessee THAT. >> I THINK THE KEY AREA IS GOING TO BE THE INTERACTION BETWEEN HEDGE FUNDS AND DERIVATIVES. IT'S POSSIBLE
01:28:51	Lo, Andrew - Director TO BUY DERIVATIVE PRODUCTS WITH EMBEDDED
01:28:53	Cooper, James "Jim" Hayes Shofner - U.S. Representative, [D] Tennessee LENCH. SO WHEN YOU
01:28:55	Lo, Andrew - Director CITED RELATIVELY LOW RATIO, ESPECIALLY RECENTLY, YOU HAVE TO REALLY LOOK AT A COMBINED MEASURE OF LEVERAGE, DON'T YOU? STILL
01:29:06	Cooper, James "Jim" Hayes Shofner - U.S. Representative, [D] Tennessee THE COMMITTEE IS WITHOUT INFORMATION ON THAT, THE TRUE LEVERAGE THAT'S IN FACT, INVOLVED. >> THAT'S RIGHT. THAT'S ANOTHER AREA WHERE I THINK GREATER...
01:29:30	Lo, Andrew - Director AND A CLEARING CORPORATION FOR CERTAIN DERIVATIVES, LIKE CREDIT DEFAULT SWAPS. >> HOW ARE THESE HEDGE FUNDS GOING TO OPERATE WITHOUT INVESTMENT BANKS...
01:29:39	Cooper, James "Jim" Hayes Shofner - U.S. Representative, [D] Tennessee ALL THE MAJOR INVESTMENT BANKS HAVE CONVERTED INTO BANK HOLDING COMPANIES? AND I GUESS THE REAL QUESTION IS, HOW ARE THEY GOING TO OPERATE WITHOUT...
01:29:46	Lo, Andrew - Director DEEP CAPITAL MARKETS THAT THEY'RE ACCUSTOMED TO? >> WELL, HEDGE FUNDS ARE NOTHING IF NOT
01:29:55	Cooper, James "Jim" Hayes Shofner - U.S. Representative, [D] Tennessee ADAPTIVE. MY SENSE IS THEY WILL ADAPT TO THE NEW REALITY VERY QUICKLY. NEW HEDGE FUNDS ARE BEING STARTED TO TAKE ADVANTAGE OF THE KIND OF OPPORTUNITIES...
01:30:13	Lo, Andrew - Director YOU. >> MR. SARBANES. >> THANK YOU, MADAM CHAIR. THANK YOU ALL FOR YOUR TESTIMONY. I WANTED TO GET TO THIS CONCEPT OF THE SOPHISTICATED INVESTOR A ...
01:30:31	Cooper, James "Jim" Hayes Shofner - U.S. Representative, [D] Tennessee EXEMPTIONS FROM THE STATUTES THAT ARE QUITE OLD
01:30:36	Maloney, Carolyn - U.S. Representative, [D] New York NOW. EVEN MUST HAVE BEEN BASED ON
01:30:38	Sarbanes, John P. - U.S. Representative, [D] Maryland A RATIONAL THAT IS ON THE PART LEASE IN MANY WAYS. THE DPEMPGSS ARE DESIGNED FOR PEOPLE WHO ARE SOPHISTICATED, FOR INSTITUTIONAL INVESTORS AND SO FORTH....
01:32:24	Bankman, Joseph - Professor INVESTORS. AND IT HAS A PROPOSAL THAT IT HAS MADE BUT HAS NOT ADOPTED, SAYING THAT YOU HAVE TO HAVE $5 MILLION
01:32:34	Ruder, David S. - Chairman IN INVESTABLE ASSETS IN ORDER TO BECOME A SOPHISTICATED INVESTOR AND BE ABLE TO INVEST IN POOLED VEHICLES. THAT'S A VERY GOOD STEP IN THE RIGHT DIRECTION....
01:34:05	Lo, Andrew - Director INVESTORS WHERE THERE'S A FIE DOUCHE EYRE RESPONSIBILITY, IT MAY MAKE A SENSE TO IMPOSE AN EDUCATIONAL MINIMUM SO WE CAN BE ASSURED THAT A PENSION PLAN...
01:34:44	Sarbanes, John P. - U.S. Representative, [D] Maryland REGULATED. THE CONCEPT SEEMS TO BE ONCE A BUNCH OF -- ONCE A GROUP OF PEOPLE ARE DETERMINED TO BE SOPHISTICATED THEN YOU'RE GOING TO LET THEM INTO...
01:35:33	Lo, Andrew - Director IF YOU LOOK AT THE PERFORMANCE OF HEDGE FUNDS AS A CATEGORY, AS A BROAD GROUP FOR 2008, HEDGE FUNDS ARE PROBABLY DOWN ON AVERAGE 10% TO 15% FOR THE...
01:36:31	Sarbanes, John P. - U.S. Representative, [D] Maryland THANK YOU, MR. CHAIRMAN AND ALL YOUR GENTLEMEN FOR YOUR TESTIMONY. I HAD SOME QUESTIONS RELATED TO YOUR PROPOSAL, THE REQUIRED RATE OF TRANSPARENCY....
01:36:50	Waxman, Henry - U.S. Representative, [D] California UNDER THE REPORTING REQUIREMENTS AND JURISDICTION OF THE SEC,
01:36:52	Van Hollen, Christopher - U.S. Representative, [D] Maryland BOTH TO PROTECT INVESTORS, INCLUDING AS WE'VE HEARD, LOTS OF PENSION FUNDS, AS WELL AS TO ADDRESS THE POTENTIAL FOR SYSTEMIC RISK AND HAVE AN EARLY...
01:38:15	Ruder, David S. - Chairman ABOUT LEVERAGE, ABOUT RISK POSITIONS, I THINK THAT SHOULD GO TO A REGULATOR SUCH AS A FEDERAL RESERVE BOARD WHICH WOULD THEN BE ABLE TOING A GAIT THAT...
01:39:24	Lo, Andrew - Director TO FAIL ORGANIZATIONS, AT THAT POINT, IT MAY BE THE CASE THAT THE FEDERAL RESERVE WOULD BE CALLED IN TO IMPOSE EITHER CAPITALED A QUASI REQUIREMENTS...
01:40:02	Van Hollen, Christopher - U.S. Representative, [D] Maryland THE FEDERAL RESERVE. WOULD THAT REQUIRE -- LET ME JUST MAKE SURE I UNDERSTAND. WOULD THAT REQUIRE CONGRESS PROVIDE THE FEDERAL RESERVE WITH ADDITIONAL...
01:40:34	Lo, Andrew - Director ASK YOU A QUICK
01:40:36	Ruder, David S. - Chairman QUESTION ON THE SHORT SITIONS. THERE'E'S LOT OF DISCUSSSSN OUT THE ROLEE OEDGEUNDSDS D NAKED SHOHORT SELLING. E E SEOOKK TITION. DOOU THIHI THATT...
01:40:54	Van Hollen, Christopher - U.S. Representative, [D] Maryland CERTAIN CONDITIONS, IT MAY BE VISIBLE FOR HEDGE FUNDS T DISCLOSE BUT NOT NECESSARILY PUBLICLY. HEDGE FUNDS SPEND A LOT OF TIME AND EFFORT DEVELOPING...
01:41:14	Lo, Andrew - Director IMPORTANT TO GET INTO THE CAPITAL MARKETS. THERE ARE CERTAIN SITUATIONS THAT MAY CALL FOR A KIND OF 13 F FILING FOR SHORT POSITIONS BUT NOT NECESSARILY...
01:41:51	Van Hollen, Christopher - U.S. Representative, [D] Maryland TO BE REVEALED BUT ONLY THE VERY LARGE ONES. >> THANK YOU. THANK YOU. >> THANK YOU. >> THANK
01:41:58	Lo, Andrew - Director YOU, MR. CHAIRMAN.
01:42:01	Ruder, David S. - Chairman LET ME ASK YOU THIS BASIC QUESTION. WHAT IS THE GREATEST -- I REALIZE YOU CAN'T REPEAL THE LAW OF GRAVITY SO I'M NOT LOOKING TO GET RID OF HEDGE FUNDS,...
01:42:13	Van Hollen, Christopher - U.S. Representative, [D] Maryland OF HEDGE FUNDS AND THE GREATEST
01:42:17	Waxman, Henry - U.S. Representative, [D] California DISADVANTAGE OF HEDGE FUNDS? I WOULD LIKE TO GO DOWN THE
01:42:20	Shays, Christopher - U.S. Representative, [R] Connecticut LINE. >> THE HEDGE FUNDS PROVIDE LIQUIDITY TO THE SYSTEM BECAUSE THEY INVEST AND THEY SELL SHORT. THEY PROVIDE PRICE DISCOVERY BY CHOOSING THE WAY THEY...
01:42:46	Ruder, David S. - Chairman JUST GO -- WOULD ANYONE ADD ADDITIONAL ADVANTAGE TO A HEDGE FUND? >> ONE ADDITIONAL SOCIAL BENEFIT IS DISCIPLINING CORPORATE MANAGERS. NOT A LARGE PERCENTAGE...
01:43:07	Shays, Christopher - U.S. Representative, [R] Connecticut ACTIVISTS. BUT IF THEY ARE, A RECENT STUDY SHOWED THAT IF THEY TAKE A CORPORATE ACTIVIST, CEO COMPENSATION WILL TYPICALLY DECREASE BY $1 MILLION AND
01:43:16	Shadab, Houman - Senior Research Fellow LONG-TERM VALUE IS CREATED FOR OTHER COMPANY SHAREHOLDER PS. >> TELL ME THE GREATEST DISADVANTAGE OR RISK OF HEDGE FUNDS? >> WELL, THE HEDGE FUNDS DO...
01:43:41	Shays, Christopher - U.S. Representative, [R] Connecticut POSITION TO CREATE A CALAMITY IN THE MARKET, OR MAYBE THE AGGREGATION OF A NUMBER OF POSITIONS MIGHT
01:43:50	Ruder, David S. - Chairman CAUSE PROBLEMS.PROBLEMS. I WOULD ADD ONE MORE. WHEN THEY BEGIN TO SELL IN TIMES OF STRESS, THEY DO CAUSE DISLOCATIONS IN THE MARKET IN TERMS OF ASSET...
01:44:21	Shays, Christopher - U.S. Representative, [R] Connecticut THE MONEY, YOU KNOW, TO RISK AND THEY KNOW WHAT THEY'RE DOING. THEY'RE WISE INVESTORS AND THEY WOULD SUGGEST LARGE, YOU KNOW, OR, YOU KNOW, UNIVERSITIES...
01:45:12	Shadab, Houman - Senior Research Fellow COWARD. >> WELL,IC I MAY T
01:45:19	Shays, Christopher - U.S. Representative, [R] Connecticut ICIC ICIC I GUESS I WOULD NOT USE THE WORD OBVIOUS LU I PUBLISHED PAPERS HIGH
01:45:24	Shadab, Houman - Senior Research Fellow IT LOOKING THE
01:45:26	Shays, Christopher - U.S. Representative, [R] Connecticut FACT THE DISLOCATION IN THE HEDGE FUND INDUSTRY WAS BUILDING. AND
01:45:29	Bankman, Joseph - Professor SO CERTAINLY THE INDIRECT EVIDENCE SEEMED TO SHOW THAT THAT
01:45:34	Shays, Christopher - U.S. Representative, [R] Connecticut WAS THE CASE. >> 1 N. 1998 I TESTIFIED BEFORE THE HOUSE BANKING COMMITTEE SUGGESTING THAT THIS TL BE THE KIND OF INFORMATION DISCLOSURE
01:45:40	Lo, Andrew - Director I SUGGESTED TODAY SO THAT TEN YEARS AGO I WAS CONCERNED ABOUT THIS PROBLEM OF THAT IN THIS MARKET. >> GOOD FOR YOU. AND, YOU KNOW, SOMETIMES WE DON'T...
01:45:55	Ruder, David S. - Chairman WERE OUT IN FRONT YEARS AGO MAKING THIS -- ATTEMPTING TO MAKE THIS POINT HEARD. HEAD OF LEHMAN BROTHERS IN A HEARING BEFORE THIS COMMITTEE LAID...
01:46:10	Shays, Christopher - U.S. Representative, [R] Connecticut FUNDS SHORTING THE STOCK. WOULD ANY OF YOU CARE TO COMMENT ON THAT? >> I THINK THAT SORT OF REVERSING THE CAUSE AND EFFECT. PROMINENT HEDGE FUND MANAGER...
01:46:36	Shadab, Houman - Senior Research Fellow THEY AT TRACKED SHORT SELLERs BECAUSE OF MISMANAGEMENT. >> BOTTOM LINE IS YOU DON'T AGREE? >> YES. >> I WOULD SAY DON'T KILL THE MESSENGER. >>...
01:47:01	Shays, Christopher - U.S. Representative, [R] Connecticut DERIVATIVES TRADING BE
01:47:02	Shadab, Houman - Senior Research Fellow SUFFICIENT? >> I THINK THE
01:47:05	Lo, Andrew - Director CREATION OF STANDARDIZED
01:47:07	Shays, Christopher - U.S. Representative, [R] Connecticut
01:47:08	Lo, Andrew - Director DERIVATIVE CONTRACTS AND THE CLEARING AND SETTLEMENT AND EXCHANGE TRADING WOULD BE A VERY
01:47:14	Shays, Christopher - U.S. Representative, [R] Connecticut FINE STEP IN THE RIGHT DIRECTION. WE'VE ALSO HAD AND ARE HAVING TODAY STEPS TOWARDS CREATING A KURNS AND SETTLEMENT PLATFORM FOR
01:47:25	Ruder, David S. - Chairman DERIVATIVE CONTRACTS. I THINK THAT'S A VERY RIGHT STEP TO OVERCOME COUNTER PARTY RISK PROBLEMS THAT WE'VE HAD. >> I AGREE. BUT I DON'T THINK THAT WE...
01:47:53	Lo, Andrew - Director STRADERYED TRADER. >> ALL MEMBERS HAVING ASKED QUESTIONS, I WANT TO THANK THIS
01:47:57	Shays, Christopher - U.S. Representative, [R] Connecticut PANEL FOR YOUR THE. IT'S
01:47:59	Lo, Andrew - Director BEEN VERY HELPFUL TO US. WE APPRECIATE YOU BEING HERE. WE'RE GOING TO TAKE A FIVE-MINUTE RECESS WHILE WE SEAT THE NEXT PANEL. SO WE WILL RECONVENE...
01:48:15	Waxman, Henry - U.S. Representative, [D] California MINUTES. >>> SO ABOUT A FIVE-MINUTE BREAK IN THIS HEARING ON TURMOIL IN THE FINANCIAL MARKETS. WE'LL COME BACK IN FIVE MINUTES. AND IN THE MEANTIME,...

NOTE: The transcript for this program was compiled from uncorrected Closed Captioning.