
Hey Geithner, Get Your Grubby Hands Off The Venture Capital Industry - vaksel
http://www.techcrunch.com/2009/04/09/hey-geithner-get-your-grubby-hands-off-the-venture-capital-industry/
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bilbo0s
OK, I'll bite.

I should preface this by saying that I am looking for more information on why
watching the sources of VC money is bad. So if there is a finance guy out here
please let me know where my thinking is flawed.

Now treasury wants to watch the sources of certain asset classes so that, say,
asset class A can't be a proxy for high risk asset class B. Now I assume, (and
we all know what assuming does), this is to prevent the finance by proxy of
high risk asset class B through low risk leverage via asset class A.

That seems, to me, to be imminently sensible given the education we've all
received through the present crisis. Perhaps I have missed something. Any help
from finance guys would be greatly appreciated.

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j2d2
The nature of VC is quite different from the nature of the forms of investing
that caused the crisis. One of the culprits behind getting the crisis to such
a massive scale is leverage. VC firms rarely leverage their funds due to the
highly risky nature. Perhaps PG or someone else could elaborate on the
behavior of VC or Angel investors because it's crucial to understanding this
distinction.

Now contrast the nature of VC vs. what people are thinking about when they put
money away for retirement. They're not trying to help get a company off the
ground. They're usually just trying to beat inflation and, if possible, get a
little more. These people lost money in a huge way. The people responsible
lost money in such a huge way that the world is now struggling. The whole
world. It is highly unlikely a VC could pull something like this off via their
investments. Even the dotcom boom demonstrated how investing ones own money
and taking on the risks involved will keep a crisis contained primarily (not
exclusively) to those involved.

Let's also not forget the SEC has not proven it's abilities to catch bad
behavior...

 _Edit: And, simply on principle, I back the notion that the Gov should
generally stay out of my business._

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jacoblyles
>Let's also not forget the SEC has not proven it's abilities to catch bad
behavior...

Given that it was warned about the Madoff fraud for 9 years and did nothing, I
would say it proved the opposite. It's interesting to see Gheitner use the
Madoff case as justification to expand the SEC's authority.

[http://www.usatoday.com/money/markets/2009-02-12-markopolos-...](http://www.usatoday.com/money/markets/2009-02-12-markopolos-
madoff-ponzi_N.htm)

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condor
If I had to guess I'd say vc oversight is part of a larger 'lets watch all the
money in the system' initiative. Seeing as how the govt has pledged upwards of
$12 trillion to bridge parts of the us financial system, I can understand why
the government would want to keep an eye on everything to limit the chances of
something in the shadows blowing up and requiring further govt bridging. Will
it work, who knows ... personally, I don't agree with it, nor do I agree with
any of the bailouts: banking, auto otherwise.

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Dilpil
It seems that VC doesn't really object to the actual regulation as much as the
implication that VC is at all like hedge funds, private equity, or investment
banking.

