Legislation is being sent to the Hill today, according to a speech to be given shortly by Assistant Treasury Secretary Michael Barr:
I would like to speak to you about where we stand today in the economy at large and the forces and incentives that led us into the current crisis. I would also like to begin a discussion with you on the sweeping set of reforms that the Obama Administration has proposed for our financial sector. In the weeks since the release of those proposals, the Administration has pushed forward this debate in testimony and outreach and continued to make our proposals concrete in legislation and regulation. Later today we will continue our efforts by sending legislation to the Hill that will require registration of all hedge fund advisers.
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Hedge funds do not appear to have been at the center of the current crisis, but de-leveraging by hedge funds contributed to the strain on financial markets and the lack of transparency contributed to market uncertainty and instability…These firms continue to present unknown risks, and that lack of transparency is no longer tenable.
Any fund with more than $30m of assets will be required to register with the SEC, assuming the legislation passes. Funds that are determined to be systemically important enough will be classified as Tier I financial holding companies, and will therefore be subject to the same set of prudential requirements on capital, liquidity and risk management facing other systemically-important institutions such as banks.