Money-market funds aren't making much money for anybody right now, but they're becoming a hot issue in Washington.

The Securities and Exchange Commission is about to propose rules designed to bolster confidence in the funds. Its goal is to prevent a repeat of 2008, when one fund's losses caused a run on other funds, forcing the government to implement a temporary insurance program.

The SEC hasn't made a formal proposal yet, but the mutual fund industry is already accusing the agency of regulatory overkill. The industry worries that drastic changes could cause investors to pull out much of the $2.7 trillion they hold in money market funds.

Certainly no one invests in money funds today for the yields, which average just 0.03 percent. Rather, they're a convenient parking spot for corporate money and a temporary home for cash that builds up in individuals' brokerage accounts.

The SEC reportedly is considering three types of new rules: A floating share price, a 30-day hold on part of each investor's account, and higher capital requirements.

If a fund's share price were allowed to fluctuate by a fraction of a cent each day, rather than being fixed at $1, investors theoretically would have more information about the fund's safety. They might, however, be spooked by the obvious risk of losing money.

The 30-day hold reportedly would apply to 5 percent of an account that someone wants to cash out. Since liquidity is the main appeal of a money-market fund, the industry also has called this idea a non-starter.

Reserve requirements are a little less controversial, but they would raise costs at an inopportune time. With interest rates at historic lows, fund companies are already waiving a big chunk of their normal fees.

The fund industry is gearing up to fight the proposed rules. Paul Schott Stevens, president of the Investment Company Institute, a trade group, posted a commentary last week saying that the proposals would "drive fund sponsors out of the industry ... and leave the remaining sponsors with a product that few investors or their financial advisers will use."

Peter Crane, founder of fund-tracking firm Crane Data, thinks none of the ideas will be implemented. SEC Chairman Mary Schapiro wants tighter regulations, but it's not clear whether she has enough votes on the commission, or whether the rules could withstand a legal challenge.

"The thought that the SEC is going to harm 30 million investors is ridiculous," Crane said. "It's one of the most powerful voting blocs in the country: people with money."

The impact goes far beyond the investment world. "Because the money market funds are a provider of credit to the corporate world, these are issues that can have an effect on the real economy," says Matthew Ringgenberg, an assistant professor of finance at Washington University's Olin School of Business.

By "real economy," he means jobs. Drive up the cost of short-term borrowing, and you give companies a reason to manage their payroll a little more carefully. A slowdown in hiring is certainly not what the economy needs right now.

We don't need a repeat of 2008 either, but the SEC already addressed the money fund problem in 2010 by limiting what the funds can own.

With a few more minor tweaks, the SEC should be able to create a money fund model that's capable of withstanding the next crisis. It shouldn't risk blowing up the industry in order to save it.