The hubbub over regulating hedge funds may be purely political, or so says The Wall Street Journal. In an editorial earlier this week, The WSJ reports on the seemingly frantic effort by Senate Finance Chairman Charles Grassley (R-Iowa) to gather suggestions on how to regulate the industry, despite the fact that reaction to Amaranth Advisors’ losses barely caused a ripple of negative reaction. If anything, the little response to such huge losses would seem to indicate that current market oversight is sufficient. Over the decades, hedge funds have escaped most rules, says The WSJ, “by promising to cater only to the wealthy” who “can afford to lose everything they put in.” By staying away from small investors for the past 70 years, says The WSJ, the Securities and Exchange Commission has left the industry alone. After all, the editorial notes, “there’s little political hay to be made by arguing that millionaires need government protection from other millionaires.” So, then who would the regs protect? Grassley points to pension funds, for example, but they’re already regulated as to how much they can invest, and they are so diversified that an Amaranth-type disaster should cause minimal damage. The WSJ says that given how the financial system has weathered so many hedge fund storms of late, it could mean only one thing: “Politicians follow the money, so it was inevitable that hedge funds would become targets as they prospered.” For what industry would not try to curry favor with the powers-that-be to avoid greater oversight? The editorial concludes: “Best of all would be for the Members of Congress to leave hedge funds alone and reform the many “systemic” financial risks – such as Fannie Mae, Social Security – that they themselves have created.”