Sheila Bair, the former head of the Federal Deposit Insurance Corp., criticized a compromise on money fund regulations that has been put forward by the industry and called on the Financial Stability Oversight Council to push for needed reforms to the rules governing money funds.

Securities and Exchange Commission Chairman Mary Schapiro had been pressing for changes such requiring that funds have a capital buffer or abandon the stable net asset value, but called off an SEC vote on those changes in August because she didn't have enough support among commissioners. With the ball now in the FSOC's court, representatives of the mutual fund industry including executives from BlackRock and Fidelity, met with the SEC last week to seek a compromise.

The industry's proposed compromise, based on a BlackRock plan released earlier this year, would let funds charge investors a fee to withdraw money in times of stress.