US clashes with EU on Hedge Fund Rules

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According to various news sources, the European Union’s proposed hedge fund rules will not exclude U.S. hedge funds from the continent.

Michel Barnier, the EU’s internal markets commissioner, reassured U.S. Treasury Secretary Timothy Geithner in a letter last month that “discrimination has no place in the emerging regulatory framework.”     Barnier further wrote that “by providing a level playing field for domestic and foreign players alike, we eliminate opportunities for regulatory arbitrage and create the conditions for fair competition.”

However, Geithner appears to have been unconvinced by Barnier’s assurances.     A week after Barnier wrote his letter, Geithner responded, again urging four European finance ministers to reject any legislation that would “discriminate against foreign firms.”

In a letter to four of the EU’s finance ministers, Geithner said the U.S. was working on its own hedge fund rules, and lobbied them to drop a proposal that could block U.S. hedge funds from Europe.      “As you consider how to design this important set of reforms, I hope you will keep in mind our shared commitment to create regulatory reform that does not discriminate against foreign firms,” he wrote to Britain’s Alistair Darling, France’s Christine Lagarde, Germany’s Wolfgang Schaeuble and Spain’s Elena Salgado Mendez.     Geithner said U.S. reforms would be similar to those called for by the Group of 20.

The British government is currently blocking the adoption of the rules by the bloc’s finance ministers, demanding that the bar on foreign funds be removed.    And U.S. lawmakers have threatened to shut European firms out of the American market if the regulations as written become law.

Anna Timone (195 Posts)


Comments

  1. Peter K says:

    I see that Turbo Tim is aware of the “self modyfying” nature of European statutes.

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