German Labor Federation Denounces US-British Protection of Hedge Funds

May 30 (LPAC)- The national labor federation of Germany, DGB, today issued a statement denouncing the US-British governmental obstruction of the German Government's initiative for fund transparency. But at the same time, the DGB makes the forecast that "as soon as the first heavy-weight among these investment funds goes bankrupt and forces the financial markets down on their knees, then, at the latest, the USA will become a pioneer of international regulation."

"We should not wait for that to happen, though, we must act before," the DGB states. "And, we cannot be content with voluntary code of conduct of the funds. That would mean to turn the criminal into the policeman." The DGB adds that whereas banks are obliged to respect certain regulations, the hedge funds are totally unregulated, therefore the initiative for national legislation which has been taken by the German Government, has the explicit backing of the labor movement, as has the intent of the government to put the issue on the agenda of the G-8 Summit.

The DGB hopes that the German legislation will serve as a model for legislative moves also in other states. Specifically, the DGB calls for a regulation that limits the investments that pension funds are permitted to make in hedge funds, to protect pensions of retired citizens, notably of retired workers, and it calls for credit restriction to hedge funds to prevent leveraged debt pyramids from emerging.