As we reported Monday in our story "ICI's Stevens Unveils Stable Value Coalition at Crane's MF Symposium," a number of groups have been mobilizing to oppose a floating NAV for money market funds. Many have written letters to Secretary of the Treasury Timothy Geithner and U.S. S.E.C. Chairman Mary Shapiro, and others have begun soliciting support from investors, issuers and fund providers. We excerpt some of the letters below, and check here for more letters and lobbying links in coming days.
Chairman Paul Stevens said in his speech at Crane's Money Fund Symposium Monday afternoon, "At ICI, we have been making this case to anyone who will listen, and urging users of money market funds and issuers in the money markets to speak out. And I'm pleased to report that they are responding. In the last several weeks, groups representing state and local governments have come out squarely in opposition to forcing money market funds to float. The National Association of State Treasurers; the Government Finance Officers Association; and the National Association of State Auditors, Comptrollers, and Treasurers -- all have voiced their support for the ability of funds to operate with a stable NAV. The SEC's own Investor Advisory Committee has before it a resolution, strongly backed by one of its subcommittees, that calls upon the Commission to preserve the stable NAV as a core feature of money market funds."
Stevens adds, "And America's businesses are also mobilizing. Just last week, four of the leading organizations in corporate finance joined in a letter to Treasury Secretary Timothy Geithner urging him to reject the notion of abandoning the stable NAV. The letter was signed by the National Association of Corporate Treasurers; the Association for Financial Professionals; Financial Executives International; and the U.S. Chamber of Commerce. They note that floating these funds will drive away investors, and the resulting drain of assets will 'severely impair the ability of companies to raise capital in the U.S. and undermine efforts to strengthen the American economy'. More than 40 companies -- many of them household names -- have signed on to this letter or others urging the President's Working Group to drop the idea of floating NAVs."
The NAST letter says, "At its 2009 annual conference, the National Association of State Treasurers (NAST), the organization that represents the treasurers or chief financial officers of the fifty states, the District of Columbia, and Puerto Rico, considered the SEC proposal to promote a floating Net Asset Value (NAV), rather than a stable $1 per share, for money market funds. In the opinion of NAST, going to a floating NAV could significantly change investor behaviors (especially institutional investors) and, as a result, potentially destabilize financial markets for both investors and debt issuers. Currently money market funds are a relatively low-cost, efficient, and convenient cash management tool for managers of public funds, and NAST would like to see them remain that way."
It adds, "While NAST understands that reasonable individuals can and have made arguments in favor of a floating NAV, this organization is firmly of the opinion that the arguments against a floating NAV are much stronger than are those in its favor. For these reasons, the National Association of State Treasurers hereby goes on record as opposing a floating NAV for money market funds."
Another letter, signed by a number of organizations and corporations, says, "The undersigned companies and organizations represent a diverse range of industries that rely on money market mutual funds to support their capital raising and investment needs. American business will lose one of its most important sources of short-term funding if money market funds are forced to abandon their stable per-share value -- one of the ideas under consideration by the President's Working Group on Financial Markets and the U.S. Securities and Exchange Commission (SEC). With such a change, the expected flight of investors from these funds will severely impair the ability of companies to raise capital in the U.S. and undermine efforts to strengthen the American economy."
It continues, "We have supported appropriate steps taken by the Department of the Treasury and the SEC to preserve and strengthen this vital source of business financing, but believe this is one proposal that should be rejected outright. We urge your support for policies that promote the use of the stable NAV that has served American investors and businesses so well for decades."
