Hedge Fund CEO: We're Safe from Regulation...For Now
The worry that financial regulation will eventually come to hedge funds has James Dinan, York Capital Management founder, chairman and chief executive, watching the current reform bill on the verge of passage in the Senate.
"The Dodd bill really doesn't affect us because we're basically a stock picker," Dinan told CNBC Wednesday, adding that his firm does not carry a lot of leverages like banks do.
"But it's just the tip of the iceberg. [Regulators are] starting with the easy stuff but is it going to stop there?" Dinan said.
"My big concern is they're going to go down the Wall Street food chain and it will affect our ability to market our funds to a broad variety of investors," said Dinan.
Dinan defended his industry's role in the European debt crisis. "Hedge funds did not cause the instability there," Dinan said, instead blaming government regulation and the peoples' entitlements.
He also criticized Germany for its decision Tuesday to ban risky naked short bets on banks, bonds and credit protection.
Europe's strongest economic power "just doesn't seem to get it," Dinan said.
"If people can't trade, they're going to disengage ... Interest rates are probably going to go up in the euro zone. It's negative for everyone," Dinan said.
Because of events in Europe over the last two weeks, York Capital has chosen to "de-risk" its portfolio by lightening up on its exposure to credit and "increasing hedges and selectively pruning non-core positions" in stocks.
______________________________
Other Views From Hedge Fund Summit:
- Time to Play US Anti-Growth Trade: Fortress Investment Head
- Removing Risk Is 'Best Course of Action': Highbridge Founder
______________________________
CNBC Data Pages:
______________________________
CNBC Slideshows:
___________________________
______________________________
Disclosures:
Disclosure information was not available for Dinan or York.