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Why Fund Managers Should Escape Regulators’ Overreach  

January 17, 2014
Peter J. Wallison, Bloomberg

The world’s bank regulators, led by the Federal Reserve and a European group known as the Financial Stability Board, have been arguing for several years that “shadow banking” requires regulation.

It was never very clear how shadow banking was defined, but there were strong indications that the goal was to subject the securities industry to the kind of “prudential regulation” that governs banks. In a statement at the end of last week, the FSB made clear how far its ambitions extend: Any investment fund that manages more than $100 billion in assets would be eligible for bank like regulation.

This proposal follows recent reports by the Office of Financial Research, a U.S. Treasury Department agency established by the Dodd-Frank Act, suggesting that large money managers of all kinds -- hedge funds, mutual funds, pension funds and others -- could create systemic risk.

Read more: Bloomberg

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