Former financial regulator Sheila Bair voiced worries about a new industry compromise plan for money market mutual funds, including implementing a fee for withdrawals during times of stress, saying it could worsen a crisis.
Fund companies met with regulators last week in Washington, hoping they would accept limited new rules for stabilizing the funds if necessary. But Bair dismissed such notions in a statement e-mailed by a spokesman.
"While I commend responsible members of the industry for trying to find solutions, I am concerned that gates coming down or fees going up in the middle of a crisis could make matters worse," Bair said in the statement on Thursday.
"Another layer of complexity is not going to calm an already very risk-averse market," wrote Bair, who chairs the Systemic Risk Council, a non-partisan group of former regulators, investors and academics backed by the Pew
Charitable Trusts and the CFA Institute, set up to monitor new financial rules and reforms.
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