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Paulson: I will kill off bad hedge funds


Date: Thursday, October 16, 2008
Author: CityAM.com

HENRY Paulson, the US secretary of the Treasury, is said to have told a leading banker that he wanted to kill bad hedge funds and heavily regulate the rest, it emerged yesterday.

The claims surfaced in an email from ex-Lehman Brothers boss Dick Fuld, written after a dinner he had with Paulson in April.

It has been uncovered by a congressional investigation into the collapse of the investment bank, one of the major factors in the global financial meltdown.

In the message, addressed to Lehman’s General Counsel Thomas Russo, Fuld gave a round up of a conversation he allegedly had during a dinner with Paulson.

Point number four in the message claimed that “they [the treasury] want to kill the bad HFunds + heavily regulate the rest”, a sentiment that will unnerve the hedge fund managers, who have already had to deal with a ban on short selling and a public backlash against the industry.

Paulson’s spokesman refused to deny or confirm that the comments were made, that the conversation took place or that the two men shared dinner.

She simply said Paulson’s views on hedge funds were well-known. Ironically, Fuld also said in the email that Lehman Brothers had “huge brand” with the treasury and that it had “loved” the investment bank’s attempts to raise new capital.

And he said that Paulson was “worried” about the soon-to-be-taken-over investment bank Merrill Lynch.