Economists at the Federal Reserve Bank of New York are warning that a Securities and Exchange Commission plan to curb the risks of runs in the $2.6 trillion money-market mutual fund industry could actually encourage the exact effect that the proposal is meant to prevent, The Wall Street Journal reports.
The SEC’s proposal was narrowly approved by the Commissioners in July. Part of the new regulations would allow money funds to impose fees for investors to redeem their shares and place temporary blocks on withdrawals during times of market stress.
