Dow Jones writes "Former Fed Chair Volcker Warns on Money Market Funds". It says, "Stronger oversight and regulation of the money market mutual fund industry is likely needed, former Federal Reserve Chairman Paul Volcker warned lawmakers in testimony prepared for a Senate hearing Wednesday. Echoing similar warnings from Fed Chairman Ben Bernanke and other Fed officials, Volcker said that regulators must continue their efforts to shore up the nearly $3 trillion money market mutual fund industry, warning of its lingering vulnerabilities." Volcker's remarks say, "The time has clearly come to harness money market funds in a manner that recognizes both their structural importance in diverting funds from regulated banks and their destabilizing potential.... If indeed they [the funds] wish to continue to provide on so large a scale a service that mimics commercial bank demand deposits, then strong capital requirements, official insurance protection, and stronger official surveillance of investment practices is called for.... Simpler and more appropriately, they should be treated as ordinary mutual funds, with redemption value reflecting day by day market price fluctuations." See too C-SPAN's "Senate Hearing on Federal Support for Financial Institutions", which features Treasury Strategies' Tony Carfang testifying. (Click on the "Video Playlist" link, "Senate Hearing on Financial Institutions" and go to the 1:39 mark.)

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