I disagree with the implication that the involvement of the Financial Stability Oversight Council is the necessary impetus for the SEC to act. Former Chairman Schapiro, rather than negotiating with her reform-minded but cautious fellow SEC commissioners, called in reinforcements—her colleagues on the FSOC.
The beauty of the SEC's structure is that it forces the chairman to work with—not shut out—her colleagues. Ms. Schapiro's decision to invoke a higher power—which Dodd-Frank would have us believe the Financial Stability Oversight Council is—set a terrible precedent for future SEC chairmen in difficult negotiations, and for the FSOC as it prepares to meddle in as many corners of the economy as it can.
The FSOC could better devote its time and cross-regulatory expertise to sorting through the complicated accounting and tax issues associated with floating money-market funds' net asset value. Doing so would form the basis for future cooperation in resolving technical issues that cut across multiple jurisdictions, while leaving independent regulatory commissions to work through their own disagreements.