Elephant on the Panel

The Senate Banking Committee's hearing today on hedge funds proved to be a dull pro forma exercise, with the three government witnesses amiably dodging both the good and the dumb questions. Makes you wonder why they even bothered to webcast the thing. A rerun of Flipper might have been more informative.

In contrast to the hysterical tone that dominated a previous hearing, this panel spent mercifully little time making a fool of itself. There was only one "baloney moment," and it slipped by quickly. That was when Chuck Hagel probed the imminent threat of research firms joining with hedgies in targeting fine companies like Overstock.com and Biovail. Overstock shares promptly rejoiced by hitting a 52-week low.

The elephant on the panel was the whistleblower Gary Aguirre, who was fired after trying to question Morgan Stanely's John Mack in a trading probe. Unless I missed it, as I may have dozed during the fascinating repartee, not one question about Aguirre emanated from the lips of the senators.

It's important, by the way, to distinguish between Aguirre's allegations and the effort to suppress him. As veteran financial journalist Don Bauder noted in a good wrapup on the subject, Aguirre's widely publicized allegations have been attacked as "flimsy."

Whether Aguirre is credible or not, this whole Mack business is troubling and should be investigated -- by actual investigators, not the U.S. Senate.

© 2006 Gary Weiss. All rights reserved.

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