In Effort to Curb Money Market Funds, a Plan B Is Considered

Publication: New York Times

Author: Peter Eavis and Nathaniel Popper

08/23/2012 —After the failure of one effort to overhaul a major part of the mutual fund industry, top government officials worked on Thursday to find alternative ways to rein in what they see as a systemic threat to the financial system.

Treasury Secretary Timothy F. Geithner and other top regulators were given sweeping powers after the 2008 financial crisis that would allow them to force new rules on money market funds, a popular type of mutual fund that has taken some of the blame for the crisis. On Wednesday evening, the head of the Securities and Exchange Commission, Mary L. Schapiro, announced unexpectedly that she was calling off her agency’s long-running effort to change rules for money funds.

Mr. Geithner and fellow regulators had urged the S.E.C. to act and could now use their new authority to shift oversight of the money market fund industry away from the S.E.C., a move that has few precedents. But after being surprised by the suddenness of the S.E.C.’s decision, numerous agencies were huddling to discuss whether they could carry out such bold moves or would have to rely on more modest alternatives, people with knowledge of the deliberations said.

Read the full article, In Effort to Curb Money Market Funds, A Plan B Is Considered, on the New York Times website.