For the past few sessions the legislature’s Banks Committee co-chairs – Sen. Bob Duff, D-Norwalk and Rep. Ryan Barry, D-Manchester – have tried unsuccessfully to pass legislation regulating Connecticut’s Greenwich-centric hedge fund industry.
Duff and Barry have continually argued that with Congress unable to get its act together on financial reform, it’s up to Connecticut lawmakers to set an example.
But with five days left in the 2010 session – and Banks Committee Chairman Democratic Sen. Chris Dodd of Connecticut hoping for a big victory before his looming retirement – it appears the federal government might actually be preparing to reform Wall Street.
So where does that leave Duff’s and Barry’s 2010 bill, which is awaiting debate in the House and Senate?
Barry said he has been in touch with Dodd’s staff to get a better understanding of how the proposed federal legislation deals with hedge funds.
“I’m still sizing things up down in D.C.,” Barry said. “If I bring the bill out it’s going to be for a good reason.”
Barry and Rep. John Stripp, R-Weston, the ranking Republican on the Connecticut General Assembly’s Banks Committee, said they understand the federal bill targets hedge funds of $100 million or more, while their proposal does not draw any limits.
Stripp said the question before Connecticut legislators is whether they feel they need to regulate the smaller hedge funds.
“Why pay a lot of attention to the crumbs when the big guys caused all the trouble? – That’s the issue we’re struggling with right now,” Stripp said. “We’re sort of leaning toward not (voting on) because we’re getting a strong feeling the federal bill will do what we hoped all along.”
Stripp noted the Duff/Barry bill, which if passed would not go into effect until Dec. 31, is written to go away should Congress and the White House enact similar reform prior to that date.
If the bill is brought out for debate it will likely be a talker because, despite Stripp’s involvement, most Republican legislators are not fans of the proposal, fearing by becoming the only state to regulate Connecticut will scare the industry away.
House Minority Leader Lawrence Cafero, R-Norwalk, already told me he has problems with wasting time on the proposal when there are so many bigger fish – the state budget deficit being one – to deal with before midnight next Wednesday.
Stripp said although the collapse of Lehman Brothers and the recent Goldman Sachs scandal have, he believes, convinced some of his GOP colleagues to support the bill, it remains a tough sell.
Does anybody in the General Assembly even know what a hedge fund is?
Financial reform is complicated, and I wouldn’t trust the average CT legislator to build me a potato gun, let alone tangle with complex financial reform. Legislators should be required to take some kind of hippocratic oath, like “First, do no harm.” … the bottom line is that the General Assembly is simply unequipped to pass meaningful financial reform, and in reality, is likely to do more harm than good with whatever they do.