[Washington Babylon ]Correction on Larry Summers/Managed Funds Association | Harper's Magazine

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[Washington Babylon]

Correction on Larry Summers/Managed Funds Association


I posted an item a few weeks ago about Obama’s top White House economics adviser, Lawrence Summers, and the Managed Funds Association (MFA), the leading lobbying organization for the hedge fund industry. I had noted that before taking his new job, Summers had resigned as a managing director of hedge fund D.E. Shaw & Co., which is a member of the MFA.

An official involved with the MFA called and asked me to correct and clarify a few points from the story, which I’m in late in getting to.

I wrote that the MFA “was founded last year and since then has spent about $3.5 million lobbying the federal government,” and that its priorities include blocking regulation of the hedge fund industry. The spending on lobbying is correct, but the MFA has been around a lot longer: it was established in 1991.

Furthermore, the MFA, the official told me, has not opposed all regulation on the industry or derivatives. The MFA did oppose an SEC proposal a few years ago that would have required hedge fund managers to register as investment advisors. But the official said that the Association has asked for more regulation of derivatives. (He said that D.E. Shaw, Summers’s old firm, is registered with the SEC and not all MFA members are opposed to requiring fund managers to register.)

Also, the official said my article suggested that Summers himself played a role at the MFA, when in fact he had no connection to the organization. My article didn’t state that but I can see how a reader could draw that conclusion.

I regret the errors or any misperceptions caused by the item. I do think, though, that the broader points of the story hold: The hedge fund industry has a good deal of political influence and it needs to be further regulated and subject to greater public scrutiny (as the current crisis makes clear). And that Summers’s political history, general economic ideas and business ties suggest that he’ll be friendly to the hedge fund industry.

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