The Wall Street Journal writes "Hidden Dangers Lurking In Money-Market Funds". It says, "It's always the quiet ones. Money-market funds -- U.S. mutual funds that buy short-term debt issued by companies, banks and governments -- are supposed to be safe, cash-like investments that lead an inconspicuous life in the lower reaches of the financial system. In normal times, these funds, which collectively have more than $2.5 trillion under management, should be stored away in the drawer marked "BBB" -- "Big But Boring" -- and forgotten. But times have been anything but normal in recent years. Cue a whirlwind of regulatory activity, led by the Securities and Exchange Commission, that could fundamentally change the nature of this huge sector, and not a minute too soon. The issue is simple-yet-frightening: Money-market funds have become "systemic" institutions, whose size, interconnectedness and behavior have the potential to cause serious damage to companies, investors and the economy.... Industry representatives point out, with some reason, that only two funds have ever broken the buck, adding that, since the outset of the euro-crisis, the sector has steadily reduced holdings of European bank debt. Indeed, the much-scrutinized French banks no longer feature among the top 10 borrowers from U.S mutual funds, according to the latest figures from Crane Data. That is reassuring news but not reassuring enough to ease the regulatory pressure."
