As money market funds faced the possibility of SEC reforms, members of the industry started a full-court press against the proposed rules, an effort that paid off last week when Mary Schapiro was forced to scrap her plans. The Financial Times just published a critical look at how the industry "fought all-out to preserve the status quo."

FT correspondents Dan McCrum and Shahien Nasiripour report that almost 2,500 letters were sent to the SEC, many of them "pleading" with the agency not to bow to industry pressure. Former US Treasury secretary Hank Paulson, former Federal Reserve chairman Paul Volcker and president of the Federal Reserve Bank of Richmond Jeffrey Lacker all wrote letters in favor of reform.

On the other side, the story reports that John Hawke, former head of the Office of the Comptroller of the Currency who lobbied against reform on behalf of his client Federated, sent regulators 15 letters opposing reforms.

The money market industry was also able to marshall "sympathetic groups," including mayors and state treasurers, to put pressure on the SEC. Back in June, Maryland state treasurer Nancy Kopp publicly opposed the rules and told regulators that "treating us sort of like children is really not appropriate," the FT reports.

And money fund companies also hired consultants to publish reports opposing the rules. Consultant Treasury Securities, for example, released a report urging its readers to “take a stand against ill-conceived reform proposals that threaten the MMF industry."  

Edited by: HFD


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