Regulation of Limited Parterships
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National politicians, from the president on down, tend to treat the savings and loan crisis, as they do the drug crisis, and all other crises, as if it is some alien animal in our midst, which has no relation to our society, and must be fought to the death. As is true with respect to the drug crisis, and other crises, this approach to the savings and loan crisis overlooks the facts that (1) the savings and loan crisis is the result of actions and policies integral to American society and federal governmental policy, and (2) the savings and loan cri sis is not an isolated phenomenon within the American financial environment it is related to other quite recent financial sec tor debacles.At least the federal government recognizes the existence of the savings and loan crisis. By contrast, the limited part nership investment problem is virtually ignored by the federal government. The problems which are being experienced by the savings and loan industry have been attributed to a number of factors. Chief among these factors cited by federal politicans, industry regulators, and media columnists are (1) fraud, (2) imprudent 37 38loans to the small players in the oil industry, and to real estate developers in states heavily dependent upon the oil industry, which, in each instance, were severely and adversely affected by the collapse of world oil prices in the mid 1980s, and (3) a widening gap in the interest rate ma
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lity to the limited partners.
2. General partners must be stripped of the power to effect changes in partnership structures from those described in the offering prospectus.
3. General partners must be prohibited from conducting the business of the limited partnership investment organization where conflicts of interest are present.
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4. General partner fees should be restricted to normal operating expenses, and internal commissions should be prohibi ted.
While the above recommended changes to general partner regulation are the minimum requirements, obtaining even these changes in the contemporary environment will be difficult. The current situation in banking and finance offers an illustration of the problems faced in obtaining federal regulatory powers. Some economists contend that the banking problems of the 1980s may be laid at the foot of the recession of the early 1980s. Certainly, some of banking's failures which occurred prior to mid 1983 were the result of a failing economy. As we are often reminded, however, the American economy has been in a sustained period of growth since mid 1984. It was, however, in the mid to late 1980s, when the effects of the recession of 1981 1983 should have had little
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Some common words found in the essay are:
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Approximate Word count = 5181
Approximate Pages = 21 (250 words per page)
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