In response to SEC Chairman Mary Schapiro’s proposal to restructure money market funds, Commissioner Daniel M. Gallagher and Troy A. Paredes submitted a joint statement on the reasons for their disagreement with the Chairman’s proposal. Specifically, they asserted that the proposals were not supported by sufficient data, would be expensive to the economy and would create risk in the economy. The Commissioners recommended that the SEC staff conduct more detailed research and analysis on money market funds before the SEC proposed rules.
This statement follows Commissioner Aguilar’s statement expressing his disagreement with the Chairman’s proposal.
Lofchie Comment: The debate between the various Commissioners over the regulation of money market funds, even if perhaps ill-tempered, seems enormously healthy to me. The mere existence of a debate over the direction of financial regulation serves as an exemplar of facts that ought to be obvious: (i) more regulation is not always better regulation; (ii) regulations can have effects which are the opposite of those intended; and (iii) it is good to think through laws/regulations before adopting them.
It might sound as if I am in opposition to Chairman Schapiro’s views on money market funds, but I am not. I don’t have the economic background to take a view on theoretical issues, and money market funds are not my area of actual practice. But I do welcome the possibility of a debate on a topic of financial regulation that is not painted as a battle between good and evil rather than a question of the better guess as to sound public policy. We need this same debate over Dodd-Frank and over the direction of financial regulation generally.
View statement in full here (links externally to SEC website).
See also: Chairman Schapiro’s Statement on Money Market Fund Reform (from August 22); Commissioner Aguilar’s Statement on Money Market Fund Reform (from August 23).