U.​S. Treasury Secretary Jacob Lew testified before a Senate Banking Committee hearing earlier this week. He said about "Key Areas of Focus of the 2013 Annual Report" and "Wholesale Funding Markets," "​The Council remains concerned that vulnerabilities in wholesale funding markets could lead to destabilizing fire sales. Specifically, run-​risk vulnerabilities related to money market mutual funds (​MMFs), which became apparent during the financial crisis, still remain, despite an initial set of reforms implemented in 2010. In November 2012, the Council issued proposed recommendations for public comment to implement structural reforms of MMFs to reduce the likelihood of runs. Council members should also examine whether similar reforms are warranted for other cash management vehicles. Vulnerabilities to fire sales also remain in the tri-​party repo market, particularly with respect to borrowers such as securities broker-​dealers. The Council'​s report recognizes the positive steps that have been taken in the last year to reduce the reliance on discretionary intraday credit, but recommends coordinated efforts by market participants and financial regulatory agencies to address the risks associated with the tri-​party repo market, notably by better preparing investors and other market participants to deal with the consequences of the distress or default of a dealer or other large borrower."

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