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House Republicans Probe FSOC Involvement in MMF Reform

Republicans on the House Committee on Oversight and Government Reform have expressed concern that the SEC’s money market fund rulemaking during the past year may have been heavily influenced by the Financial Stability Oversight Council (FSOC). Last week, they requested that five U.S. financial regulators, including SEC Chair Mary Jo White, produce records in order to discover the extent of this interference.

In a letter requesting such records, committee Chairman Darrell E. Issa and Representative Jim Jordan wrote, “The committee is concerned that the council may be structured and operating in a manner that vitiates the independence and core competence of the council’s constituent regulatory bodies.”

The letter indicates that the records collected by the investigative committee may show that former SEC Chairman Mary Shapiro and her aides coordinated with FSOC officials in order to construct a proposal for money-market fund reform, before other commissioners of the SEC had seen the proposal.  Specifically, the letter expresses concern that an official at the Federal Reserve made edits to the term sheet that the SEC staff would use to brief SEC Commissioners on proposal, without informing the Commissioners about the origin of those comments.

Click here for a copy of the full letter.