BOSTON (Reuters) - Independent trustees of the money market funds at Fidelity Investments called proposed industry reforms a “perverse mis-prioritization,” according to a letter released on Thursday.
The trustees, including former CIT Group Inc Chairman Albert Gamper Jr., told the Financial Stability Oversight Council that there are more pressing financial and economic issues than reforming money market funds. Boston-based Fidelity is the largest U.S. provider of money market funds, with $432 billion in assets at the end of 2012, according to Lipper Inc, a unit of Thomson Reuters.
“We think that singling out (money market funds) as the first financial product to be subject to FSOC recommendation...a perverse mis-prioritization in light of more pressing financial and economic issues,” Gamper wrote in the letter.
In November, the FSOC, which is headed by the U.S. Treasury secretary, asked for comments on several proposed money market reforms.
Like Fidelity management, the independent trustees objected to the FSOC proposals such as requiring funds establish capital buffers to protect from massive redemptions during a time of crisis. Money funds suffered a wave of panicked withdrawals during the 2008 financial crisis.
“We object to the characterization of (money market funds) as shadow banking because MMF balance sheets and assets are a beacon of light compared to the opacity of the balance sheet and off-balance sheet liabilities of so many regulated and non-regulated financial institutions,” Gamper wrote in the letter to the FSOC.
Reporting By Tim McLaughlin; Editing by M.D. Golan