Globe on Fidelity MMF Lobbying
Sunday's Boston Globe writes "Fidelity fought Washington over money market funds -- and won". The article says of Fidelity CEO Abigail Johnson, "Her trip to meet with the SEC chief in June 2012 was part of an epic and unusually harsh lobbying battle waged by Fidelity and a handful of allies in the mutual fund industry. Their mission: stop the Obama administration's move in the aftermath of the financial crisis to rein in a huge and highly profitable part of their business, money market funds.... The SEC faced withering criticism as it tried to fortify money market funds -- which emerged as a surprising threat to the economy at the height of the crisis -- against future investor runs and potentially calamitous failures.... The story also offers a window into the public policy agenda of one of Boston's richest corporate sectors. Among mutual funds, Fidelity had the most to lose.... Ned Johnson made Fidelity an early pioneer in money market funds, which are low-risk investments that offer small gains but are supposed to provide a stable and convenient place to park cash. He invented the concept of check-writing for the funds in the 1970s, helping them become hugely popular with mom-and-pop investors across America. Today Fidelity manages by far the largest amount of assets in money market funds in the world, with $410 billion. By charging just a tiny fraction of that massive sum in fees, it reaps about $650 million in annual revenue.... Five years of trench warfare lurched to a close this year, in July, when the SEC issued final rules. It was billed as a compromise, but reformers said industry got the best of the deal. The "floating" share price will be required, but only for funds that serve large institutional investors -- the category that experienced the biggest runs in 2008. The fixed $1 share price will remain in place for funds open to small-time, retail investors and for funds that invest in government and municipal debt. For Fidelity and others, it represented "a qualified victory," said Marcus Stanley, policy director for Americans for Financial Reform, a nonprofit advocacy group that sought tougher action. "They fought off a bunch of things that were much more problematic for them." At the time of passage, Mary Jo White, the former federal prosecutor and SEC chairwoman who replaced Schapiro, hailed the new rules as a "strong reform package" that will reduce the risk of runs. `Fidelity's head of fixed-income, Nancy Prior, said the SEC struck "a reasonable balance.""
