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What keeps SEC chairwoman up at night? Money market funds (+video)

The health of money market funds leads the list of worries of SEC chairwoman Mary Schapiro, America's top financial market regulator. Past wild swings in the stock market rank up there, too.

What keeps SEC Chair Schapiro up at night?
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America’s top financial market regulator says the health of money market funds tops her list of worries.

Securities and Exchange Commission Chairman Mary Schapiro said Wednesday that “everything keeps me up at night,” but that her first concern is the structural weakness of money market funds, a popular place for individuals to park their savings in search of higher interest rates than most banks offer.

“I do feel a sense of urgency about the structural weaknesses that exist in money market funds,” she said at a Monitor-hosted breakfast for reporters, noting that the SEC took steps in 2010 “to improve credit quality and liquidity" of the funds. Those measures “clearly helped these funds weather a lot of the volatility of the European crisis this [past] summer,” Ms. Schapiro said.

Her second key concern, she said, is the need to further bolster the underlying structure of financial markets in the wake of the so-called “flash crash.”  That was the May 6, 2010, event when the Dow Jones Industrial Average plunged roughly 10 percent, only to recover rapidly after some blue-chip stocks briefly traded for pennies.

“The flash crash was a huge wake-up call for regulators about the frailty of our market structure,” Shapiro said. “I think we have done some very important things in that regard to bolster and shore it up. There is more to do.”

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