Ben Bernanke, chairman of the US federal reserve, has warned against over regulation of the hedge fund industry. Bernanke said that U.S. authorities must take care not to stifle financial innovation by over-regulating the derivatives and hedge fund industries.

"I would be very reluctant to get involved in heavy-handed, direct regulation of hedge funds," Bernanke told the Senate Banking Committee in response to a question during semi-annual testimony on monetary policy.

"One of their key characteristics is that they are very nimble," Bernanke said. "That is good for the economy, because they help create liquidity in markets, they help to spread risks around more broadly, and a regulatory regime that inhibited that flexibility and nimbleness would eliminate a lot of the economic benefits."

Rest of the story; This was an unpublished story I did for another website.