“A SWAT team of top regulators was formed after the financial crisis to swoop in and stamp out big risks lurking in the financial system. Should the mutual fund industry fear this team as it tries to protect one of its biggest products from further reform?

The Securities Exchange Commission said Wednesday that it would have to drop its proposed overhaul of the money market mutual fund industry after it was a clear that a majority of its commissioners would not support the reforms. Investors use money market funds like banks accounts, a theoretically safe place to park cash for short-periods. But a large amount of investors fled the funds during the financial crisis in 2008. Regulators have therefore wanted to impose changes they think would prevent such runs.

After the S.E.C. defeat, regulators are contemplating pursuing money fund overhaul through the Financial Stability Oversight Council, a body composed mostly of the heads of essentially a super-committee of financial regulators. It was set up by the Dodd-Frank legislation to identify systemic risks that individual regulators may not have a grip on — and then set in motion moves to remove those risks. The council, which is chaired by Treasury Secretary Timothy F. Geithner, has said that money funds are a concern, and backed the reforms scuttled at the S.E.C.”

“F.S.O.C. exists for this very circumstance,” said Dennis Kelleher, president of Better Markets, a lobbying group that has pushed for stronger financial regulation.