U.S. Senator Pat Toomey (R-Pa.) criticized the proposed money market fund regulations released by the Financial Stability Oversight Council (FSOC) today.
"FSOC's proposed regulations are a mistake, just as they were when SEC Chairwoman Mary Schapiro proposed them," Sen. Toomey said. "Some regulators mistakenly believe that it is their responsibility to make it impossible for any money market fund to "break the buck.' But it should not be the goal of government regulators to overregulate for the sake of trying to prevent any and all risks. Regulation should instead focus on limiting systemic risk and providing adequate disclosure to investors, while allowing individual investors to make their own choices about where to invest their money and the risk they want to assume.
"Furthermore, money market funds offer investors and borrowers a stable and highly liquid financial instrument that plays an important role in our economic system. Money market funds play a critical role in meeting the short-term capital needs of American businesses, from small manufacturers to large corporations. Also, many households in Pennsylvania and across the country use these funds to earn a modest return on their money. The proposed regulations would significantly shrink the industry and would result in less borrowing, less economic growth, less investment options for households, and ultimately fewer jobs.
"I urge FSOC to follow the SEC's bipartisan lead in eschewing these proposed regulations. The SEC has overseen the regulation of money market funds for four decades, and it understands the product best. I also urge the Senate Banking Committee to convene a hearing to review the cost-benefit of these proposals before moving forward. I look forward to questioning Secretary Geithner, Chairman Bernanke, Chairwoman Schapiro and other members of FSOC on whether these fundamental changes are in the best interest of investors and the economy as a whole."
Sen. Toomey has been at the forefront of the debate over the new regulations, joining with Sens. Michael Bennet (D-Colo.), Mike Crapo (R-Idaho), Mark Kirk (R-Ill.), Bob Menendez (D-N.J.) and Jon Tester (D-Mont.) to send a bipartisan letter to SEC Chairwoman Mary Schapiro urging caution in moving forward with the proposed regulations. The senator also met with SEC commissioners, arguing that the money market fund industry is a stable and important financial instrument that has thrived for decades.