The new kings of Wall Street -- as the managers of booming private equity and hedge funds have been dubbed in the business press -- will come under unaccustomed scrutiny on Wednesday before the U.S. Congress.

In three separate hearings on Capitol Hill, lawmakers are expected to ask whether these secretive and super-rich financiers pay enough taxes and whether the Bush administration does enough to protect the economy and investors from them.

A handful of bills have been filed in both the Senate and the House of Representatives that would sharply raise tax rates paid by both private equity and hedge fund leaders, many of whom are billionaires but largely unknown to the public.

People are definitely worried that this represents a chance to raise tax rates .... We'll see how much momentum it gains. But it's a big topic. It's getting a lot of attention, said Chrisanne Corbett, head of the private equity team and a managing director at Big Four accounting firm KPMG.

The Senate Finance Committee will hold a hearing on Wednesday on taxing carried interest, or the 20 percent cut of profits above targeted returns typically kept by senior partners of private equity and hedge funds on major deals.

A bill already introduced in the House would raise carried interest taxes to as much as 35 percent, the top income tax rate, from the present capital gains tax rate of 15 percent.

Backers of the House bill -- including powerful House Ways and Means Committee Chairman Charles Rangel, a New York Democrat -- say it would close a loophole that lets a fortunate few dodge paying income taxes on carried interest.

Also in the morning, the House Financial Services Committee will convene a session to look into systemic risks to the economy and investors that may be posed by hedge funds.

Chairman Barney Frank, a Massachusetts Democrat, has taken a circumspect approach to hedge fund issues since taking over the financial services panel following last November's elections that handed his party control of Congress.

On Wednesday afternoon, a hearing before the House domestic policy subcommittee will focus on small investors' exposure to hedge fund risk and the recent $4.13 billion initial public stock offering of private equity firm Blackstone Group.

Rep. Dennis Kucinich, the Ohio Democrat who chairs the subcommittee, unsuccessfully asked federal regulators to delay Blackstone's IPO last month pending further examination.

Blackstone was the first high-profile private equity firm to bring in investors as a publicly traded partnership (PTP).

Fearing that a wave of similar IPOs could erode the tax base, Senate Finance leaders -- Montana Democrat Max Baucus and Iowa Republican Chuck Grassley -- have introduced a bill that would more than double the tax rate on PTPs. Vermont Democratic Rep. Peter Welch has introduced a similar bill in the House.

Taken together, the legislation and multiple public hearings threaten to shake the statutory underpinnings of one of the hottest sectors of the U.S. financial system.

In response, lobbyists for private equity and hedge funds, keen to protect their tax status, are fanning out across Washington offering statements about the job-creation and other positive economic impacts of their industries.

The corporate law firm Paul Hastings predicted in a recent client alert letter that passage of any of these bills looks uncertain and could face a White House veto threat.

What is indisputably clear is that the tax treatment afforded to private equity firms, hedge funds and PTPs is in play and will continue to be in play through the remainder of this year and likely well into 2008, the law firm said.