Efforts to overhaul money market funds have posed not just a challenge to the Securities and Exchange Commission, which will finally vote on an overhaul package on June 5, but also to its new overseer, the supercommittee of agencies known as the Financial Stability Oversight Council (FSOC), the New York Times DealBook blog reported on Friday. A lot of blame for the depth of the financial panic in September 2008 can reasonably be laid at the door of the money market funds, according to the analysis. The collapse of the Reserve Primary Fund – it broke the buck, which money market funds were designed and regulated to never do, on Sept. 16 of that year – led to the collapse of the entire asset class. Because money market funds were large purchasers of the commercial paper corporate America uses to finance its operations, that market ground to a halt as well. The Financial Stability Oversight Council has the power, under Section 120 of Dodd-Frank, to review and make recommendations related to a member agency’s regulation of a systemically significant sector of the financial system.
