Securities and Exchange Commission Chairman Mary Schapiro called off a highly anticipated vote on rules for the money-market mutual-fund industry after losing a swing vote she needed to push through the rules, the Wall Street Journal reported today. The newly announced position of Luis Aguilar, a Democrat and former mutual-fund executive, marks a defeat for Schapiro and a setback for the Obama administration and top federal regulators, who see money funds as a source of systemic risk left over from the last financial crisis. Representatives from large fund companies including Vanguard Group Inc., Fidelity Investments and Charles Schwab Corp. repeatedly met with politicians and SEC commissioners, including Aguilar, to try to get them to support their position against further regulation of the industry. Schapiro's proposal would have required money funds either to float their share prices like other mutual funds or to post capital against losses on their asset holdings. The proposal would also have made money funds hold back a small portion of investors' cash for 30 days when investors redeem all their shares, to reduce the incentive to flee at a first sign of trouble.
