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Money Market Fund Reform Through FSOC?

In the wake of SEC Chairman Mary Schapiro's announcement that the SEC will not be voting on a money market fund proposal, speculation has increased about what action, if any, other regulators may take on this issue.  The most likely actor would be the Financial Stability Oversight Council (FSOC) which is essentially a super committee of financial regulators formed under the Dodd-Frank Act.  A recent New York Times DealBook article discusses FSOC's options:

"One [option] is to designate the whole money fund industry as a risk. But the Dodd-Frank legislation effectively says that if the [FSOC] took that approach, the S.E.C., as the funds' primary regulator, would ultimately have to sign off on the reforms. The S.E.C.'s current commissioners might not vote for the recommendations. But another set might.

Another option: The [FSOC] might designate individual money funds, or the companies that manage them, as systemically important. Those funds would then end up regulated by the Fed, which could decide to impose new rules.  But the [FSOC's] members might worry that picking only some funds could create instability in the sector and create an unlevel playing field."

The article emphasizes that the FSOC will likely move slowly and carefully on any reforms.  "Not only will it need to build a detailed case for designating money funds as a risky sector, it will also want to make doubly sure that it properly fulfills its own procedures."