Venture Capital Creating Systemic Risk???

Jackreed_E_20100409164604 Rhode Island Senator Jack Reed was quoted in the WSJ yesterday saying that VC firms managing $30mm of capital or more need to report to the SEC because "the government needs the reporting requirement so it can assess whether
these private pools pose a systemic risk to the financial system."

The only systemic risk the VC business is creating for the financial system is attempting to put the current one out of business by financing entrepreneurs with new ideas for banking, brokerage, insurance, and other financial services. I'm not joking about this. I believe entrepreneurs will use technology to reinvent the way financial services are provided to consumers this decade.

But to suggest that small venture funds of $30mm could possibly be creating systemic risk to the global financial system is ludicrous. I can't even imagine a huge $1bn venture fund could create systemic risk, but I can understand how a regulator might want to keep track of something like that. But a $30mm fund???? I'm speechless.