Matt Fink Analyzes Impact of 2008 Financial Crisis on Mutual Funds

Jan 10, 2011, 09:00 ET from Oxford University Press

NEW YORK, Jan. 10, 2011 /PRNewswire/ -- The new edition of Matthew P. Fink's book, The Rise of Mutual Funds: An Insider's View, discusses the 2008 financial crisis and its impact on mutual funds.

The new edition maintains that:

* The crisis did not result from a lack of regulatory tools, but from regulators' failure to utilize tools they possessed. The SEC exempted asset-backed pools from regulation, repealed the uptick rule on short-sales, and lowered capital standards for securities firms. The Federal Reserve Board declined to crack-down on unscrupulous lending practices, and, most importantly, the Fed refused to raise interest rates to curb excessive housing speculation.

* Mutual funds were hit hard by the crisis, but fared considerably better than other institutions, such as hedge funds, banks, and securities firms, that employed leverage far in excess of that permitted for mutual funds.

* The crisis caused the first large money market fund to fall below one dollar per share, leading the SEC to tighten its regulation of money funds. But it would be perverse to subject money funds to bank regulation. Taxpayers have paid billions to bail out banks, whereas money funds, regulated by the SEC, have not cost taxpayers one cent.

* In the wake of the crisis there were calls to limit the size and activities of financial institutions. The Administration and Congress rejected this approach, and instead the Dodd-Frank Act granted regulators, who produced the crisis, even more authority. We are headed toward a world of giant financial conglomerates that are too big to manage or regulate, riddled with conflicts, and periodically in need of massive government bailouts.

The new edition also sets forth Matt Fink's views on:

* The most important event in fund history.

* The worst event in fund history.

* The most important person in fund history.

To set up an interview with Matt Fink, please contact Jared Wright at or 212-726-6136.

The second edition of The Rise of Mutual Funds: An Insider's View Oxford University Press ($19.95 / 360 pages/  ISBN 978-0-19-975350-5).

SOURCE Oxford University Press