Much Ado About Geithner
Because of the problems caused by AIG, the government is correctly considering regulating previously unregulated institutions that have the potential of becoming too big to fail. In testimony before the House Financial Services Committee today, Treasury Secretary Timothy Geithner suggested that venture capital and private equity firms may be required to register with the SEC. Bill Gurley of Benchmark is concerned about Geithner’s remarks, but I just don’t see this as an issue for VCs to get worked up over. Geithner said he wants to regulate financial and non-financial entities that “collectively pose a threat to financial stability.” The entire U.S. VC industry manages roughly $250 billion, according to the NVCA, and those venture investments are essentially illiquid. Unlike AIG, there is nothing that a single venture firm (or even the industry as a whole) could do to imperil the U.S. financial system.
