ICI on securities lending at mutual funds

Just another link about mutual funds and securities lending:
http://www.ici.org/viewpoints/view_11_securities_lending

"Doing so allows mutual funds to generate incremental income and improve total returns with a reasonable amount of additional risk. Securities lending also provides liquidity to the market by enabling brokers to cover failed trades or short positions."


Reasonable amount of additional risk? Really? By lending out the stock mutual funds socialize the losses and privatize the relative performance gains by incrementally generating income(feds fund rate .5-1%? avg?). Yet on an aggregate basis the funds increase the supply of stock driving prices down. If they overall are increasing the supply of stock by 30% the net effect is way worse than this incremental income... 
As a mutual fund investor I have to say I fee sold down the river by my fund looking for incremental income in exchange for giving my stock a new owner that is hell bent to destroy my capital.
http://en.wiktionary.org/wiki/sell_down_the_river

I also want to say why is it in the interest of a mutual fund to "provide liquidity" to a market... if your shareholder wants the value of their investments to go up... I don't want liquidity I want a shortage of stock driving up the price of a new investor has to pay to get the stock... loaning out stock keeps prices the same or lower by "providing liquidity" ... the idea that providing liquidity is in the best interest of shareholders is patently absurd.

see :
The Effect of Short Selling on Bubbles and Crashes in Experimental Spot Asset Markets



the new owner (Mr. Short seller or Naked short seller if they sold first and begged for stock later)
is by no means as friendly to my stock as the original owner the "mutual " fund... where did we lose the "mutual" concept... there is nothing mutual about a short seller owning my stock and selling , trashing it with FUD (Fear, Uncertainty, and Doubt) and then giving it back to me after its been through the ringer.
No thanks mutual funds... stop securities lending now

PS. notice how the authors even call out mutual funds complicity in getting naked short sellers off the hook by helping them cover FTDs after the fact. Mutual funds have been "captured" by thieves...
but as I've said before its a prisoner's dilemma that fund mangers who don't participate face higher banking fees for not accepting the extortion and have lower relative returns by experiencing the share declines without the incremental income.

How to stop it?
Shareholder proposals? New regs? Morningstar shame rating  perhaps an indicator on how much of the fund is sold down the river for incremental income...
I favor the shareholder propsoals
but also I think the IRS can take care of the whole thing with a constructive sale definition change that says if you trade X for Y plus interest that you've constructively sold since X<> Y 100%...