The ICI is worried about systemic economic and financial risk, and it wants the U.S. Government to do something about it. On Tuesday, the mutual fund trade group released a new white paper, Financial Services Regulatory Reform: Discussion and Recommendations, asking the feds to create a new super "systemic risk regulatory" to "broadly monitor the financial markets," as well as a new "capital markets regulator ... responsible for oversight of U.S. capital markets, market participants, and all financial investment products."

Keeping in line with fundsters' longtime complaints of the disparity in regulation between mutual funds and other investment products, the paper calls for the new capital markets regulator "to address gaps in regulation relating to hedge funds, derivatives, and municipal securities, as well as to harmonize the legal standards applicable to investment advisers and broker-dealers."

"The financial crisis highlights the longstanding need for regulatory reform to develop a more effective framework for overseeing modern financial markets and mitigating risks to the financial system at large," stated ICI president and CEO Paul Schott Stevens. "Such a framework should, among other things close regulatory gaps, bolster regulatory expertise, and improve inter-agency coordination."

In light of the recent Madoff and Stanford scandals, though, fundsters might find that the relatively high level of regulation and transparency imposed on mutual funds stands out as a strong competitive advantage in a world of declining stock markets and crashing Ponzi schemes. 

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