The council and others said they hoped to work with the administration and Congress on regulatory changes. But opposition could flare as the plan's details are crafted.
"Any time you propose to do something this comprehensively, you're going to have various actors opposing pieces of it," said Robert Pickel, chief executive of the International Swaps and Derivatives Assn. "We will have to see as the proposal develops whether any parts are of particular concern."
Many hedge fund managers think they're paying for the excesses of AIG and large investment banks that they say caused the financial crisis, said Charles Gradante, co-founder of Hennessee Group, a hedge fund advisory firm. Several fund managers complained to him Thursday about Geithner's proposal, he said.
"There are managers who feel that if this [proposal] is not controlled, it could interfere with the free market," Gradante said. "They're worried about limitations on leverage and exposures of their short positions and general interference."
But private equity firms and hedge funds may have some negotiating leverage.
The administration is looking to them to help buy bad mortgage loans and other troubled assets as part of a public-private partnership that Geithner unveiled Monday to cleanse the balance sheets of banks.
The Obama administration wanted to unveil its regulatory framework before the major international economic summit in London next week with the heads of 20 leading nations, known as the Group of 20, or G-20. Many countries are expected to press further for tougher financial regulations.
The U.S. plan might not fully satisfy those calls, analysts said, but it allows President Obama to show that the United States is serious about trying to address the regulatory gaps that helped trigger the deep global recession.
"I think in part it's designed to show forward motion," said Gary Clyde Hufbauer, a senior fellow at the Peterson Institute for International Economics. "It takes a small step toward the European position, but not a big step."
The framework outlined by Geithner also includes stronger requirements for money market funds so that increased withdrawals won't threaten the broader financial system.
Economists and business experts say it would result in the most significant new regulation of the financial system since the broad changes made during the Great Depression more than 70 years ago.
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jim.puzzanghera@latimes.com
