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— Weiss devotes five chapters of his book to tearing up hedge funds, saying such things as "Hedge funds are glorified mutual funds with fees that are high enough to choke a Clydesdale, Belgian, Percheron or other draft horse." Also, he quotes figures from a prominent economist showing that hedge funds actually underperformed the overall market from 1995 to 2003. So why does so-called "smart money" invest in these things? I suspect there are hidden tax advantages from the offshore locations, and there's a whole lotta stashin' goin' on, but others say that's only a small factor.

In his testimony, Aguirre warned that hedge funds could become as dangerous as the unregulated pools of money (called syndicates, trusts, and pools) that manipulated stocks in the ultimately disastrous markets of the 1920s. He is concerned that big concentrations of loot parked in hedge funds will lead to another takeover wave like the one of the 1980s when good companies were raided and seized by crooks with shady sources of money. He would like to see hedge funds regulated, even though an appellate court late last month knocked down the securities commission's attempt to make hedge funds register with the agency.

Harrumphs Weiss, "The regulation of hedge funds is ridiculous. The SEC is not going to do anything. Hedge-fund regulation has such gigantic loopholes you could drive the Northeast Corridor Amtrak trains through it."

As Gary Aguirre points out, influential forces make sure the agency has neither the funds nor the legal clout to do its job against the rich and powerful. There is another problem: for lawyers, a gig at the Securities and Exchange Commission is a stepping-stone to high-paying Wall Street jobs. The staff attitude, says Weiss, is "You can't do that to John Mack. We might want to work for Morgan Stanley one of these days."

It's time for a national discussion on these topics.

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