The Investment Company Institute and the chairman of the ICI Money Market Working Group, William McNabb, who is also the chief executive officer of Vanguard, are speaking out against the Financial Stability Oversight Council’s meeting yesterday to discuss money market fund regulation.
In a statement, McNabb said: “It’s deeply disappointing that the Council has proceeded without giving due weight to the views of fund sponsors, investors, and the issuers who depend upon money market funds for vital financing.”
ICI president and CEO Paul Schott Stevens said that: “Regrettably, today’s action by the FSOC fails to advance the debate over how to make money market funds more resilient in the face of financial crisis. The Council apparently is proposing to send back to the Securities and Exchange Commission the very same concepts that a majority of the Commission’s members declined to issue for public comment in August.”
In addition, Stevens added that the process that the FSOC is following is “deeply flawed” because the SEC is the only agency that has the necessary expertise as the regulator of mutual funds. He said that the FSOC’s proposals, if implemented, will increase risks to the financial system by concentrating assets in a few large institutions or driving assets into alternative products that are far less regulated and transparent than money market funds.”