U.S. Treasury Secretary Jacob L. Lew, in a recent speech to the Pew Charitable Trusts Foundation, provided his insights on new financial protections put in place in the wake of the 2008 recession and described what he believes still must be done to protect the nation’s economy.
In discussing actions taken under the Dodd-Frank Act, Secretary Lew noted that “there has been and will be ongoing debate on what are the right levels for capital and liquidity, the size of banks, and the structure of markets.” He strongly suggested that money market funds continue to be an area of concern for regulators:
“And while the money market fund industry plays an important role in the everyday financial needs of many Americans, it is not without risk. As we saw in the financial crisis, some funds were susceptible to runs and new protections were needed. The Council made recommendations for additional reforms, to supplement changes made by the SEC in 2010. The SEC has proposed additional reforms and is working to finalize them. Having strong new protections for the money fund industry goes hand in hand with the broader work we are doing to safeguard the financial system. The Council will continue to work closely with the SEC, advocating for strong reforms to this core financial product.”
Secretary Lew was also complimentary about a recent report on the asset management industry authored by the Office of Financial Research within Treasury, saying that the “report provides the Council with important analysis as it begins to look at whether the asset management industry and its activities present risks to the broader financial system.”