FOR IMMEDIATE RELEASE:
Occupy the SEC and OWS-Alternative Banking Working Group call for the Financial Stability Oversight Council to follow the consultation requirements of the Dodd-Frank Act in drafting new recommended rules for money market funds, and to open their closed-door meetings to all stakeholders.
New York, NY – November 5th, 2012
Occupy the SEC and the Alternative Banking Working Group have sent a joint letterto Secretary of the Treasury Timothy Geithner and SEC Chairman Mary Schapiro asking for a change in the process of crafting money market fund regulations
The collapse of Lehman Brothers exposed the systemic importance of money market funds, which link millions of individual investors to the short-term commercial paper markets. The SEC enacted a first phase of reforms in 2010, but was unable to reach a majority vote among the Commissioners earlier this year on the next phase of proposed rules. This failure led the Financial Stability Oversight Council to step in earlier this year.
While it is encouraging to see renewed pressure for regulation, there are signs that the process of crafting the proposed rules has been compromised by undue industry influence. Rather than working solely with the SEC to develop recommendations for public comment as required by Section 120(b)(1) of the Dodd-Frank Act, recent press reports indicate that members of the FSOC have been consulting with industry in closed-door meetings to gather their input.
Prioritizing the industry’s views in developing its recommendations before the public has a chance to comment runs counter to both the requirements of the law as well as any concept of regulation as a public good. The unwelcome alignment between regulators and the regulated is most obvious in the parallels between Secretary Geithner’s letter to the FSOC and a key industry proposal from BlackRock. This appears to be another example of giving the financial industry preferential influence in the process of rulemaking, one that risks making the public comment process a mere ex-post formality.
We call on the regulators to end this practice of secretive consultations with industry, to follow the requirements of Rule 120 in developing their recommendations, and to develop their proposed regulations with the interests of all stakeholders – not only industry – in mind.
Occupy the SEC is a group of concerned citizens, activists, and financial professionals with decades of collective experience working at many of the largest financial firms in the industry. For further information, visit http://occupythesec.org or email firstname.lastname@example.org.
Alternative Banking Working Group is a group of concerned citizens, activists, and financial professionals with two goals: the first is to explore and, if possible, establish alternative banking systems, that might replace the current system. The second goal is to broadly understand and educate people about the current financial system. For further information, visit http://alternativebanking.nycga.net.