“Prominent alumni of the Securities and Exchange Commission are defending the agency’s turf in a battle of Beltway bureaucracies. Wouldn’t it be nice if someone defended taxpayers?

“On Wednesday several former SEC chairmen and commissioners wrote to the Financial Stability Oversight Council (FSOC) urging that panel of regulators to stay out of the way and let the SEC address potential reforms to money-market mutual funds. Perhaps the alums should also tell their old colleagues at the SEC to get on with it.

“Taxpayers have been waiting years for the SEC to act to prevent a repeat of the 2008 federal bailout. If SEC commissioners want to keep other regulators from trying to fix problems created by SEC regulations, the obvious solution is to rewrite SEC rules—now.

“Though money funds are securities holding assets that rise and fall in value, SEC rules allow money funds to employ an accounting fiction to create the perception that their values are fixed. To further persuade investors that these securities are super-safe, the SEC anoints private credit-ratings agencies, including Standard & Poor’s, Moody’s and Fitch, to determine which assets are least risky and allegedly suitable to be owned by money funds.”

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