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A hearing with UK members of parliament yesterday gave hedge fund managers and industry representatives the opportunity to reiterate the view that the problems of the world's financial markets lie with the banks and the authorities that were meant to regulate them.

Before members of the Treasury select committee, senior executives from four of the UK's biggest hedge fund managers said the massive share price falls suffered by the country's banks were down to their own failings, not the actions of short sellers who have been accused of exacerbating their stock market decline.

Stephen Zimmerman of alternative asset manager NewSmith Capital Partners declared bluntly: 'You can see the huge destruction of wealth that has taken place in these companies [the banks] and I do not believe that it's down to short selling of their shares.'

Paul Marshall (pictured), co-founder of hedge fund manager Marshall Wace, said the significant fall in the value of bank shares over the past few months shows that the Financial Services Authority was wrong to ban short selling and that the ban had resulted in impairment to the market.

It should now be time to stop scapegoating the hedge fund industry, but it may not work out that way. Yesterday's hearing came amid reports that US hedge fund manager Paulson & Co made profits of anywhere between GBP100m and GBP280m by shorting the shares of Royal Bank of Scotland, which has had to be taken into majority public ownership. Who would bet against this triggering another inquiry into short-selling?

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