Lawmakers from both sides of the aisle have proposed legislation in recent years to limit the central bank's authority.
Event-driven hedge funds speculating on corporate deals and restructurings are falling out of fashion, with investors withdrawing $31 billion from managers this year.
The ill-timed Alibaba trades add to the hedge fund industrys woes as some of its biggest and best-known firms lose assets amid souring investor sentiment.
Speculation is mounting that Fed officials, in a statement scheduled for release on Sept. 21, will signal that higher U.S. interest rates are on the way.
"A sooner-than-expected hike could result in these stocks trading up sharply, but the options market is largely discounting / overlooking this possibility," strategists wrote in a client note.