Top U.S. regulators are set to focus on borrowing by the hedge-fund industry, particularly large funds, as they assess potential risks in the asset-management sector, the Wall Street Journal reported today. The Financial Stability Oversight Council voted unanimously at a public meeting yesterday to endorse a 27-page “update” of its more-than-two-year review of financial-stability risks tied to the asset-management industry. Treasury Secretary Jacob Lew said that the oversight council, a group of senior regulators that he heads, has found that leverage in the hedge-fund industry appears to be concentrated at larger funds, though he cautioned that “greater leverage does not necessarily imply greater risk or systemic risk” and more factors need to be considered. Securities and Exchange Commission Chairman Mary Jo White said her agency, the fund industry’s primary regulator, supported the council’s joint statement yesterday but that the SEC would be making its own decisions about future rules. “We will consider and rely on our analysis of the input we receive from the public in the notice and comment process,” she said.
