[Read more about the Reserve Primary Fund in The Decade's 10 Worst Fund Disasters.]
However, in light of the failed August effort, it remains to be seen whether the FSOC's recommendations will be enough to get reform through the SEC. Mike Krasner, the managing editor of the money market research firm iMoneyNet, labels the FSOC's proposals "a lot of reheated leftovers," based on their similarity to the failed SEC efforts. "I'm not sure that fund providers and fund investors have much appetite for what's on the menu at the moment," he said.
It is also unclear what form the FSOC's final recommendation, which will follow the public comment period, will take. The FSOC indicated, though, that it would be willing to combine aspects of the various proposals in order to find a happy medium.
In the event that the SEC turns down the FSOC's recommendation, that could lead to a turf war. The New York Times, in evaluating the possibilities, reports: "Only the [SEC] can enact regulations on money market funds. But if it fails to heed a council recommendation, the oversight group could designate individual funds or fund companies as 'systemically important,' making them subject to even tougher oversight by regulators." Krasner calls the "systemically important" designation the "nuclear option."