Comment Re:VCs don't pose any systemic risk (Score 1) 445
I think the idea is to regulate places where the fraudsters, bluffers, and snake-oil salesman might resurface when their old haunting grounds are regulated. The current size of a sector doesn't rule it out. Venture capital seems pretty simple (invest in a company, make money if it succeeds) but mortgage lending is pretty simple, too (lend to a homebuyer, make money if he pays you back). If mortgage lending can be complexified until blatant frauds and wishful thinking can hide behind the sophistication, then perhaps venture capital could be turned into the next hot source of unlimited, guaranteed, completely illusory returns. And it would have plenty of political protection: it could cloak itself in the American dream of entrepreneurship like mortgage-backed abominations cloaked themselves in the American dream of home ownership.
That's not to say I think VCs should be regulated like hedge funds; in fact, I don't. I just wanted to explain why someone in DC, looking back at the mortgage mess and trying to imagine where the fatal combination of complexity, wishful thinking and fraud will come from, might think it's a good idea to regulate venture capitalists.