Schapiro, SEC Try to Reform Money Market Mutual Funds Industry

Posted by adaniels in Blog on May 17, 2012

Mary Schapiro and the Securities and Exchange Commission have been attempting to tackle reforming the country’s  $2.6 trillion mutual funds money market system, reports. But although she recently insisted that her agency was committed to “honest open debate,” some are skeptical.

 Paul Schott Stevens, president of the ICI, a trade association for mutual funds, said that his group had had a “rocky time” recently with the SEC, and that they had found themselves “at loggerheads” with the group. The SEC recently announced reform proposals, including tightening credit standards, and suggesting a liquidity requirement on mutual funds.

 But Schapiro said Friday that she had been “counting on the industry to engage constructively in the debate” on the next step. She pointed out that the federal government cannot fix the industry. “The tools to do that do not exist any longer,’’ she noted. “So we want to confront this issue.’’ Schapiro also said she had been “counting on the industry to engage constructively.”

The risk of a run “is real, it’s happened,’’ she said, “and it has to be resolved.’’ In 2008, the Investors Reserve Primary fund “broke the buck,” due to investments with Lehman Brothers. Money market accounts are not protected by the Federal Deposit Insurance Corporation.

Written by Lisa Swan


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