Press Center

 Statement by Treasury Secretary John Snow Following today’s meeting of the President’s Working Group on Financial Markets


11/14/2003
JS-1002

“One of the issues we discussed today were the reports about improprieties in the mutual fund industry.   Given the mutual fund industry's substantial contribution to financial markets, it is critical that the working group be kept up-to-date on reform efforts in this area. Chairman Donaldson briefed the other members of the working group on the status of the Commission's ongoing review and anticipated policy reforms of the mutual fund industry.  More than 54 million Americans households use mutual funds as an effective way to invest and save for their families and their futures.  Mutual funds are an important part of our vision for an ownership society.   If any insider in the mutual fund business engaged in improprieties to the detriment of hard-working investors, they should be held to account.  Chairman Donaldson at the SEC is very focused on cracking down on wrongdoing .  I am confident that the reforms he has initiated will help to protect mutual fund investors, and that wrongdoers will be punished to the fullest extent of the law.”

Background on the President’s Working Group on Financial Markets

The President’s Working Group on Financial Markets (the “Working Group”) was established by Executive Order 12631 in March 1988 in response to the stock market crash in October 1987.  The chairman of the Working Group is the Secretary of the Treasury, and the other members are the chairmen of the Board of Governors of the Federal Reserve System, the Securities and Exchange Commission, and the Commodity Futures Trading Commission. 

The Working Group issued its report on the 1987 market crash in May 1988, and conducted follow-up work in 1991.  The Working Group did not meet regularly in the early 1990s and was relatively inactive until 1994, when it was reactivated by then-Secretary Bentsen.

Although the Working Group was created originally to address issues related to the 1987 stock market crash, it now serves as a forum through which the participating agencies exchange information on and coordinate regulatory policy regarding U.S. financial markets more generally.  For example, the Working Group has drafted and proposed legislation designed to improve financial contract netting, and it has written reports and developed recommendations on circuit breakers, hedge funds, and over-the-counter derivatives markets.  It also is a forum used to exchange information during market turmoil through ad hoc conference calls and meetings.

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