
It's getting harder to start a startup hedge fund - byrneseyeview
http://online.wsj.com/article/SB121364877315978651.html?mod=us_business_whats_news
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jraines
Just call it something more exotic sounding and charge an even higher
commission on earnings.

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byrneseyeview
I think that trend reached its peak with the CPDO
(<http://www.interfluidity.com/posts/1163375565.shtml>), which was basically a
contractual obligation to pursue Gambler's Ruin.

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eru
They should regulate banks like in New Zealand: Do not regulate minimum safety
standards and give state guarantees to depositors --- but instead make banks
give full disclosure on their assets and obligations and let depositors (= the
market) judge.

Really the same approach like with stocks et al.

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byrneseyeview
Markets usually do this, by finding ways around the regulations. In the early
20th century, trust companies could get around bank regulations, so they made
riskier loans and grew faster, which worked well for a while. And hedge funds
do that now -- many of them offer investment banking services (e.g. market
making, debt structuring, direct investment/underwriting, etc.) without the
same set of rules as regular banks.

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eru
Yes. But they are opaque.

Mandating transparency (and only transparancty) could be one of the few good
regulation.

Though I heard that some besieged investment banks have been disclosing their
obligations fast - to restore or keep confidence in their liquidity. (I'd have
to re-read the Economist for details.)

