Securities and Exchange Commission Chairman Mary Schapiro appeared Thursday before the Senate Banking Committee on money market funds and proposed regulations.
Chairman Schapiro testified that money market funds pose a systemic risk and warrants consideration of additional regulations. The example she cited was the destabilizing run (investors fled money markets following Lehman collapse) in 2008.
Fund company representatives also testified at the hearing and spoke about the stability of the funds. Money-market mutual funds are open-ended funds that make short-term investments in securities. Unlike bank accounts, they are not insured by the FDIC.
This is the second time Chairman Shapiro appeared on Capitol Hill this week. She answered questions about the JPMorgan Chase trading losses before the House Financial Services Committee on Tuesday.
Additional witnesses included: Maryland Treasurer Nancy Kopp, Investment Company Institute President Paul Schott Stevens, Federated Investors Inc. CEO J. Christopher Donahue, Safeway Inc. Vice President and Treasurer Bradley Fox and Harvard Business Professor David Scharfstein.
Sen. Tim Johnson (D-SD) chaired the hearing.