If we don’t learn from the financial crisis of 2008, George Santayana’s famous dictum tells us we’ll have to repeat it someday. Unfortunately, the Securities and Exchange Commission just flunked a lesson from one of the crisis’ scariest moments.
When investors pulled $300 billion out of money-market mutual funds in a single week, it was the modern equivalent of a run on the bank. One fund’s losses on Lehman Brothers investments had shaken confidence in the multitrillion-dollar industry.
SEC Chairwoman Mary Schapiro figured, then, that regulators should make money funds safer. She proposed a set of rule changes, but ran into opposition from the mutual fund industry. Read more about this story at St. Louis Post Dispatch.