10 August 2007

Larson Hedges His Bets

Congressman John Larson is jumping on the populist notion that hedge funds are not good for Connecticut and the economy. In his wisdom, he has filed legislation that would create a study commission to determine whether the tax structure that applies to hedge funds is fair for consumers.

This is a common trick in Washington - when you don't understand something or you think someone might think you are not thinking about the little guy - appoint a commission to validate your premise. Then you can tell audiences and voters that you are concerned and think the government should look into it. It looks harmless, but it is part of new trend by Democrats to destroy one of the most successful new financial industries in Connecticut.

Scores of hedge funds now operate in Connecticut, most of them in Fairfield County and the coffers of Connecticut benefit when taxes are assessed on the successes of these funds.

But already Attorney General Dick Blumenthal sees a headline and an opportunity. If he has his way, then many of the Connecticut hedge funds will be subject to more oversight and regulation. Blumenthal thinks its unfair that people or institutions lose money in hedge funds. Well, Dick, that is the point. One person hedges so that someone else loses in the game of high finance. For someone who lives off dividends and interest, you would think this scion of Greenwich would get it. He doesn't.

Oh, and Larson's legislation? It doesn't have one co-sponsor.