August 23, 2012 (PLANSPONSOR.com) - With three Commissioners saying they will not support a staff proposal to reform the structure of money market funds, Securities and Exchange Commission (SEC) Chairman Mary L. Schapiro has called off a vote.
“[B]ecause three Commissioners have now stated that they will not support the proposal and that it therefore cannot be published for public comment, there is no longer a need to formally call the matter to a vote at a public Commission meeting,” Schapiro said in a statement. She added that some Commissioners have instead suggested a concept release, which at this point does not advance the discussion. “The public needs concrete proposals to react to,” she stated.
Retirement plan industry groups also presented objections to the SEC’s proposal in a letter to Schapiro (see “Trade Groups Object to Money Market Fund Regulations”).
Schapiro said she and many other regulators and commentators from both political parties and various political philosophies consider the structural reform of money markets one of the pieces of unfinished business from the financial crisis. She called on other policymakers, who now have clarity that the SEC will not act to issue a money market fund reform proposal, to take this into account in deciding what steps should be taken to address this issue. “One of the most critical lessons from the financial crisis is that, when regulators identify a potential systemic risk
—or an industry or institution that potentially could require a taxpayer bailout—we must speak up. It is our duty to foster a public debate and to pursue appropriate reforms. I believe that is why financial regulators, both past and present, both Democrats and Republicans, have spoken out in favor of structural reform of money market funds. I also believe that is why independent observers, such as academics and the financial press—from a variety of philosophical ideologies—have supported structural reform of money market funds, as well,” the statement said.