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A Call to Congress


The fund industry has historically done an effective job of responding to regulatory challenges. Last Monday's show of force by the Investment Company Institute and 31 industry leaders was a case in point.

The show of force came late, as the deadline for consensus on $1.2 trillion in deficit reductions loomed. And it also did not specify what measures the industry believes the government must take.

But it represents a strong voice from the industry in Washington, where it counts.

Industry heavyweights sent a letter to the Joint Select Committee on Deficit Reduction, or the Super Committee, urging them to come to a consensus on reducing the deficit by $1.2 trillion.

Not just for the sake of the markets, the fund leaders said, but for the sake of the 90 million American mutual fund investors.

"These are Americans who are investing for a bright future-a secure retirement, a better education or a solid financial foundation," the letter read. "They need responsible action by their government to protect the health of the economy and the financial markets, on which they depend.

"The health of our markets, the prosperity of our nation and the security of future generations all depend on it," the letter eloquently concluded.

The fund industry certainly showed political prowess in September 2008, as the crisis created by the collapse of the Reserve Primary Fund threatened not just U.S. capital markets, but those of the entire world. Led by former Vanguard Chairman John Brennan and other leaders from the ICI, the industry swiftly stepped forward to collaborate with the Treasury Department on a money market back-stop insurance facility. This effectively restored order to, and faith in, money market funds.

Earlier in the decade, in 2003, as the market-timing scandal erupted, the industry worked assiduously with Congress and the Securities and Exchange Commission to scale back the more than 30 proposed new industry regulations.

The industry must continue to voice its concerns on behalf of its investors.

When the $11 trillion fund industry talks, the United States Congress has to listen.