U.S. Chamber Warns Against Flawed FSOC Process, Recommendations on Money Market Regulation
‘FSOC should allow SEC to consider other approaches that would strengthen rather than severely weaken money market mutual funds’ Hirschmann Says
WASHINGTON, D.C.—David Hirschmann, president and chief executive officer of the U.S. Chamber’s Center for Capital Markets Competitiveness, today issued the following statement on the release from the Financial Stability Oversight Council (FSOC) of draft recommendations to the Securities and Exchange Commission (SEC) to advance additional reforms to money market mutual funds:
“The FSOC is repeating the SEC’s same flawed process by outlining proposals that would tear down a vital source of financing for American companies, cities and states. Once again, regulators have put the cart before the horse – proposing solutions without clearly defining the specific problems they are addressing, without studying the impact of sweeping reforms already adopted by the SEC in 2010, and without examining the impact of their proposals on corporate, state and municipal funding. Regulators have repeatedly indicated they agree that money market funds are an essential source of financing for companies, cities, and states, and yet they have focused all their attention on a narrow group of proposals that would fundamentally make the product unusable.
“Instead of acting now and simply re-hashing the same proposals that were not supported by a bipartisan majority of the SEC, members of the FSOC should have allowed the SEC to consider other approaches that would strengthen rather than severely weaken money market mutual funds. Failure to consider and study options that would strengthen rather than destroy the product is regulatory malpractice. This action reinforces to investors and issuers that regulators simply want to fundamentally alter the structure and use of money market mutual funds until they are no longer a viable investment tool. What they should be doing is preserving the utility and strengthening the resiliency of this product that is a vital means of cash management for millions of investors – including retirees, universities, state and local governments, and businesses – and borrowers.
“We are deeply disappointed that the FSOC chose to ignore very serious, legal procedural issues raised in recent letters and proceed prematurely with recommendations. The FSOC interjecting itself in an investment security issue that is clearly under the SEC’s jurisdiction sets a troubling precedent for any independent agency. All five SEC Commissioners have indicated that they are willing to consider additional regulations.
“With legislatively mandated rules grossly behind schedule and unprecedented fiscal cliff negotiations and uncertainty pressing, it seems the FSOC members have taken their eye off the ball by focusing on unnecessary, additional regulations on a vital, transparent and resilient investment product.”
With support from congressional members from both parties, a broad and diverse coalition of hundreds of businesses, mayors and state treasurers have urged the SEC to reject proposals that would undermine the effectiveness of that allow them to efficiently and affordably manage cash. To view a list of some of the voices who have spoken out on this issue, please click here.
Since its inception three years ago, 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.