Publisher Steve Forbes says that the U.S. Treasury is crushing venture capital firms with “burdensome new regulations,” as part of the administration’s plan to reform financial markets.

These “obtuse” plans also run the risk of inhibiting innovation in America, choking off much-needed funds for start-up firms which create new jobs, Forbes says.

“Even though most venture capital outfits are relatively small and rarely, if ever, use debt, the Treasury wants to apply a bewildering array of rules similar to those for investment advisors and banks” writes the publisher and investor.

“Thus, instead of focusing on funding the next potential Apple, Microsoft, or Oracle, VCs will have to devote considerable time and resources to filling out disclosure and compliance forms.”

Forbes believes that Treasury Secretary Timothy Geithner is offering nothing but a “lame excuse” when regulating venture capital, as Geithner reckons that leaving out venture capitalists would be a form of discrimination.

“Alas, there's more at work here than pigheaded logic,” writes Forbes.

“This Administration truly believes that the private sector is a destructive, unguided missile that needs the constant and close supervision of Washington politicians. Without it we'd be subject to more disasters like the current financial crisis.”

As a result of the proposed new regulations, Washington, in effect, would like investors to have to go through the equivalent of an environmental impact statement before their monies can be used by start-ups.

“Entrepreneurs, executives and investors cannot be left to their own devices,” Forbes notes. “Washington doesn't like the idea of venture capitalism because VCs and the entrepreneurs they fund create and do things without anyone's permission.”

Others seem to agree about the state of VC funding.

A report in the Wall Street Journal indicates that small venture capital firms are now “pooling” resources, rather than flying solo.