Hedges, Private Equity, and the Little Guy

http://prospect.org/cs/articles?article=hedges_private_equity_and_the_little_guy

What happens to corporate and government pension plans when the bottom falls out on hedge funds?

Robert B. Reich | July 6, 2007

With the bond market dropping and the bull market slowing, hedge funds and private equity funds are all the rage on Wall Street, and their managers are raking in fortunes. These funds are so unregulated they can get high returns from risky deals unavailable to mutual funds or publicly-traded companies. And with lots of money sloshing around the global economy, those risky deals don’t seem all that risky. But what happens when the bottom falls out?

It’s one thing if wealthy investors lose the shirts off their backs. They still have plenty of freshly-ironed ones in the closet. In fact, the argument for not regulating hedge funds and private equity funds is that their investors are big enough and tough enough to take care of themselves.