Congressional Hearing Quotes
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Here are a series of quotes from yesterday's testimony.
``We do not need greater regulation of hedge funds,'' said Kenneth Griffin, founder of Citadel Investment Group LLC in Chicago. ``We've not seen hedge funds as a focal point of the carnage.''
Soros, founder of Soros Fund Management LLC, cautioned against ``ill-considered'' rules because this industry is reeling from market losses and client defections.
``I believe our tax situation is fair,'' Paulson said. ``If your constituents, whether a plumber or a teacher, bought a stock and if they held that stock for more than a year they would pay a long-term capital gains rate.''
``This isn't just about sophisticated, high-stakes investors anymore,'' Davis said. ``Institutional funds and public pensions now have a huge stake in hedge funds' promises of steady, above-market returns. That means public employees and middle-income senior citizens, not just Tom Wolfe's Masters of the Universe, lose money when hedge funds decline or collapse.''
Falcone, 46, said he supported more public disclosure and transparency. Investors ``have a right to know what assets companies have an interest in -- whether on or off their balance sheets -- and what those assets are really worth,'' he said.
Soros warned the committee against ``going overboard with regulation'' now that ``the bubble has now burst and hedge funds will be decimated.
``In our business, one of the most fundamental principles is alignment of our interests with those of our clients,'' said Paulson, who takes 20 percent of any gains. ``All of our funds have a 'high-water mark,' which means that if we lose money for our investors, we have to earn it back before we share in future profits.''
Hedge-fund managers have had ``unimaginable success'' and, while being ``virtually unregulated,'' many enjoy special tax breaks, said Waxman, a California Democrat. Today's witnesses, he said, earned on average more than $1 billion last year, profits they were able in many cases to treat as capital gains rather than as ordinary income, which is taxed at a higher rate.
``I gotta tell you, that is a staggering amount of money,'' said Representative Elijah Cummings, a Maryland Democrat. ``You are not taxed like ordinary citizens.''