The EU’s passing of new hedge fund regulations is a semi-victory for Timothy Geithner, who had been sparring with his counterpart in France, Christine Lagarde over the new rules.
When the EU tried to pass new rules earlier, Lagarde attempted to strengthen their jurisdiction over funds outside the EU.
Lagarde’s ideal hedge fund regulations would require outside investors to register and comply with the EU’s standards. A feared consequence was that hedge funds in the US might find it harder to attract and market to European investors.
She and Geithner exchanged letters about their disagreement, and something finally convinced her.
The rules passed today (they still need to make it through European Parliament) are a compromise that Lagarde is transparently miffed about:
“It is indeed a compromise,” said French Finance Minister Christine Lagarde at a meeting of finance ministers here.
“I think we probably could have come up with something better.”