UPDATE 2-US hearings to eye private equity, hedge funds

(Recasts with additional hearings, background)

By Kevin Drawbaugh

WASHINGTON, July 5 (Reuters) - Three U.S. congressional panels plan to examine private equity firms and hedge funds at separate hearings next Wednesday, turning a spotlight on an industry that some lawmakers think should pay sharply higher taxes.

The vast wealth amassed in recent years by private equity and hedge fund managers is drawing lawmakers' attention like never before, with the Senate Finance Committee set to look into raising taxes on managers' "carried interest" pay.

The finance committee will hold a hearing on Wednesday morning, while at the same time the House of Representatives Financial Services Committee holds a hearing on systemic risks to the economy and the financial system posed by hedge funds.

Later that same day, the House subcommittee on domestic policy will hold a hearing on whether small investors should be exposed to hedge fund risk such as the $4.13 billion initial public offering of private equity firm Blackstone Group (BX.N: Quote, Profile, Research, Stock Buzz).

The House domestic policy subcommittee is chaired by Ohio Democrat Dennis Kucinich, who called on regulators last month to delay the Blackstone flotation.

The hearings come as Congress considers legislation that would raise the taxes of alternative asset managers, who wield growing power on Wall Street, while also questioning whether the Bush administration is doing enough to regulate them.

House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat, said his hearing will feature testimony from senior officials of the Federal Reserve, the Treasury Department, the Securities and Exchange Commission and the Commodity Futures Trading Commission.