California Candidate Fiorina Wants Greater Transparency for Hedge Funds
Carly Fiorina, campaigning to be California’s first Republican senator elected in two decades, said hedge funds should be subject to greater transparency requirements and the financial regulatory overhaul known as the Dodd-Frank Act doesn’t go far enough.
The lightly regulated businesses that engaged in some of the riskiest activities, the so-called shadow financial system targeted by the legislation, still exist, the former Hewlett- Packard Co. chief executive officer said in an interview yesterday in Bloomberg’s San Francisco office.
“Hedge funds should be subject to transparency, I think we’ve got to see what’s going on in those capital flows,” said Fiorina, 56. The Dodd-Frank Act “punishes hedge funds, but it’s not clear to me we’ve created transparency in hedge funds.”
Fiorina hopes to unseat Senator Barbara Boxer, a Democrat, next month to become the first Republican elected to the senate from California since Pete Wilson in 1988. The former CEO has raised about $14 million less than Boxer, a three-term incumbent, and trails her opponent by as much as 9 percentage points in statewide polls.
The Dodd-Frank Act, named for its authors, Senator Christopher Dodd, a Connecticut Democrat, and Representative Barney Frank, a Massachusetts Democrat, was enacted in July to take aim at abuses that led to the worst financial crisis since the Great Depression.
The law requires hedge funds to register with the Securities and Exchange Commission as investment advisers and provide information about their trades and portfolios so that regulators can examine the risk posed to the financial system.
“Dodd-Frank ignored a whole set of issues and created some other issues,” Fiorina said.
The law will set up “a vast new government bureaucracy” in the Bureau of Consumer Financial Protection and “533 new regulations yet to be written, and there is no way for taxpayers or voters to understand what those rules are going to be,” Fiorina said.
Fiorina, who fired more than 17,000 employees in five years at the helm of Palo Alto, California-based Hewlett-Packard, has pledged to restore “fiscal accountability.” She would limit government salaries and benefits and end so-called earmarks by lawmakers that use federal tax dollars to pay for special home- district projects.
The federal government shouldn’t be expected to bail out California, whose fiscal woes include a $19.1 billion budget deficit, Fiorina said.
“To simply hand California money is going to once again allow California to punt on making the tough choices that need to be made,” Fiorina said. “What they can do is put a competitive tax structure in place.”
She offered her proposal for creating so-called “jobs for Americans zones,” geographic areas that would receive tax breaks to lure manufacturing jobs back to the U.S., as another way to improve the state’s economy.
“We need to be aggressive about matching some of the tax treatment that other countries are providing,” Fiorina said. “Ultimately, we have to have a competitive tax structure. We don’t.”
With California’s unemployment rate at 12.4 percent in August, the third-highest in the U.S. behind Nevada and Michigan, Fiorina also called for a two-year payroll tax holiday for small businesses and startups that add workers.
Fiorina, a history major in college and a law school dropout, became the first woman and the first outsider to serve as Hewlett-Packard CEO when she was hired in 1999 after heading Lucent Technologies Inc. Directors of the computer maker ousted her in 2005 after the company’s shares dropped about 50 percent on her watch.
Fiorina led Hewlett-Packard’s 2002 acquisition of Compaq Computer Corp. that was intended to grab a bigger piece of the personal-computer market. While sales jumped 88 percent to $79.9 billion in 2004 from $42.4 billion in 1999, net income advanced just 0.2 percent to $3.497 billion from $3.491 billion.
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