Wisely, the Congress continues to resist the entreaties of the Office of Thrift Supervision and the Comptroller of the Currency, which insist that they must have full authority to regulate non-banks, including mutual funds and securities firms, that are affiliated with banks and thrifts. The position of OTS and the Comptroller would lead to duplicative and conflicting regulation. More importantly, their position risks erosion of the uniform investor protections of the federal securities laws, which serve a very different purpose than the safety and soundness concerns of banking regulation. We must continue to support those legislative leaders who insist on legislation that provides for true functional regulation. Challenge Misinformation Fourth, we must guard against recurring myths and unfounded suggestions of problems that do not, in fact, exist.
Misinformation is to no one's benefit.
One myth is that when markets break, fund shareholders will panic and engage in massive redemptions, forcing funds to sell securities and causing the market to spiral further downward. This question has been studied exhaustively. Every study has found that through numerous market breaks over the past sixty years, fund shareholders have never panicked. Shareholders are not insensitive to market declines, but their response has been measured and gradual. Another concern that is voiced from time to time is that mutual fund flows drive stock prices.