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Should hedge funds and private equity funds be worried about Washington? No. - There continues to be chatter about dealing with carried interest. But chatter does not mean action and we see little actual movement toward raising the rates on carried interest through 2016. - The new “tax reform” focused on hedge funds is projected to raise $11 billion a year. somehow this gets done by allowing the IRS to audit hedge funds and find this amount of unreported revenue annually. Good luck with that. - Private Equity has also been a focus of political chatter - maybe we see new regulation on the burgeoning “Shadow Banking” sector? Again, chatter is not action. There is little chance Congress or regulators will move aggressively in this space through 2016. - But “Big Banks” continue to take it on the chin: In an effort to raise revenue for the Highway Trust Fund, Republicans have legislation moving forward that would drop the guaranteed interest rate banks receive for “investing” in the Federal Reserve — which they are required to do by law - from 6 percent to 1.5 percent. This will result in a significant drop in revenues for some of the biggest banks in the US. Deutsche Bank Francis J. Kelly Global Public Affairs francis.j.kelly@db.com 5 HOUSE_OVERSIGHT_026799