U.S. Chamber Urges FSOC and SEC to Evaluate Existing Money Fund Reforms Before Taking Action

Rush to Judgment Could Destroy Important Capital Raising Tool for Job Creators

WASHINGTON, D.C. —Treasury Secretary Timothy Geithner released a letter yesterday urging his colleagues on the Financial Stability Oversight Council (FSOC) to vote to tighten money fund rules at the SEC.  In response, David Hirschmann, president and chief executive officer of the U.S. Chamber's Center for Capital Markets Competitiveness, made the following statement:
“The events swirling around money markets prove that in the new Dodd-Frank world, regulators can just keep asking the same question until they get the answer they want. The majority of SEC Commissioners want to study the performance of 2010 money market fund reforms before deciding if more regulations are necessary. We also think it is prudent to ask questions before shooting.

“Businesses use money market funds to raise capital and manage cash flows. The FSOC needs to consider that it may destroy tools used by companies to grow and create jobs. Millions of investors – from retail investors to universities to cities and states – will also likely oppose the proposal pushed by the Treasury Secretary if he merely re-packages the same harmful plans put forward by Chairman Schapiro.

“Those proposals were rejected at the SEC because they would have destroyed a valuable product and exacerbated rather than reduced systemic risk.  It's time for a different approach that begins with examining the significant reforms that have already been implemented, and if any additional changes are needed, focus on approaches that will strengthen rather than destroy a product those businesses and investors rely on. While the FSOC has acted in secret in these discussions, we would expect the Council and SEC to follow regulatory procedures set by law, as well as the president’s executive order on regulatory reform in deciding its next steps.”

Since its inception in 2007, the Center for Capital Markets Competitiveness has led a bipartisan effort to modernize and strengthen the outmoded regulatory systems that have governed our capital markets. The CCMC is committed to working aggressively with the administration, Congress, and global leaders to implement reforms to strengthen the economy, restore investor confidence, and ensure well-functioning capital markets.

The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.