Tim Geithner, US Treasury secretary, this week made a fresh plea to European governments not to “discriminate” against US fund managers as they negotiate new rules for the hedge fund and private equity industries.
“I understand that the draft . . . would discriminate against third country funds and fund managers by denying them the opportunity to access the European Union single market via a passport approach, which would be limited solely to EU funds and fund managers,” Mr Geithner said in an April 5 letter to Alistair Darling, chancellor, that was obtained by the Financial Times.
“It is my hope that this provision will be revised to provide non-EU funds, fund managers and global custodians the same access as their EU counterparts and promote a single market,” Mr Geithner wrote.
The letter was also sent to Wolfgang Schäuble, Christine Lagarde, and Elena Salgado, the finance ministers of Germany, France and Spain.
Mr Geithner sought to highlight the contrast between the new EU regulations being discussed and financial reform legislation that is being supported by the US administration of Barack Obama and considered by Congress.
“Our regime will treat all advisers and funds operating in the US equally regardless of their origin – domestic or non-US,” he wrote. “I hope we can work together constructively to achieve strong financial regulatory reform.”
Last month, EU finance ministers abandoned efforts to reach a compromise deal over the proposals after a last-minute intervention by Gordon Brown, the prime minister. However, the talks are expected to begin again later this year.
The alternative investment fund manager directive, the first effort at drawing up EU-wide rules for the industry, has faced sharp criticism from within the sector. The most contentious part of the directive focuses on rules for non-EU funds and managers.
Mr Geithner, who had already expressed his concerns about the directive in a letter last month to Michel Barnier, the EU internal market commissioner, said this week that he was “happy to learn” the EU would “spend more time” studying the issue.
Andrew Baker, CEO of the Alternative Investment Management Association, said Mr Geithner’s latest “important letter illustrates the international concern that Europe’s AIFM directive has diverged from the Group of 20 path and will have a protectionist outcome”.
Additional reporting by Brooke Masters in London
Get alerts on US economy when a new story is published