Federal Reserve Governor Daniel Tarullo joined a call for the Securities and Exchange Commission to tighten oversight of the $2.5 trillion money market fund industry, which he said puts financial market stability at risk.
"Money market funds remain a major part of the shadow banking system and a key potential systemic risk even in the post-crisis financial environment," Tarullo said in a speech today at the University of Pennsylvania Law School in Philadelphia.
SEC Chairman Mary Schapiro in August gave up on a plan to tighten regulation of the funds, an alternative to bank accounts for individuals and companies, after three of the five commissioners told her they wouldn't vote to issue it for public comment. Treasury Secretary Timothy F. Geithner urged "further reform" of money market funds in a letter last month to the Financial Stability Oversight Council, a group of regulators that includes the SEC and is headed by the Treasury.
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