Bankrate.com writes "Money market funds safer with new rules". The article says, "Though they aren't FDIC-insured, money market mutual funds are supposed to be the safest investment this side of a CD account, and they usually are. But like most investments, money market funds, or MMFs, got dragged into the financial crisis of 2008, and the regulatory chickens are still coming home to roost. New rules by the Securities and Exchange Commission, or SEC, went into effect in May restricting how money market funds can invest in an attempt to prevent future runs on MMFs.... The new SEC rules are designed primarily to make MMFs safer for investors, especially during times of economic stress, by shortening maturities and improving the credit quality of money-market fund investments, says Sean Collins, senior director of industry and financial analysis with the Investment Company Institute in Washington, D.C." Bankrate writes, "[O]ver time, when you add all these rules together, there will be a measurable cost in yield for the increased safety provided by the new rules, says Peter Crane, president of Crane Data in Westborough, Mass.... Estimates range from 3 (basis points) to 20 basis points, Crane says. However, Crane agrees that most investors probably won't notice because, 'even in a spread-out environment, the cost in yield would be dwarfed by a single move by the Fed,' he says.... 'Would (these changes) have stopped a spontaneous run? Maybe,' Crane says. But regulators are still discussing stronger steps such as an emergency liquidity bank or some formalization of the type of government backing for MMFs that came into play in 2008, he says."
