The latest Comment Letter posted on the SEC's site for feedback on the `President's Working Group proposals is from a host of organizations. Signed by the following: American Public Power Association, Council of Development Finance Agencies, Council of Infrastructure Financing Authorities, Government Finance Officers Association, International City/County Management Association, International Municipal Lawyers Association, National Association of Counties, National Association of Health and Educational Facilities Finance Authorities, National Association of Local Housing Financing Agencies, National Association of State Auditors, Comptrollers and Treasurers, National Association of State Treasurers, National Council of State Housing Agencies National League of Cities, and the U.S. Conference of Mayors, it says, "The organizations listed above representing state and local governments would like to bring to your attention the vital role money market mutual funds (MMMFs) play for our members. As we have stated in previous comments to the Securities and Exchange Commission, notably to proposed changes to SEC Rule 2a-7 in 2010, we support initiatives that would strengthen money market funds and ensure investors are investing in high-quality securities. However, we are alarmed by recent reports that the SEC may alter the nature of these products and eliminate or impede state and local governments' ability to invest in these securities. As issuers of municipal securities, we also are concerned that such changes would dampen investor demand for the bonds we offer and therefore increase costs for the state and local governments that need to raise capital for the vital infrastructure and services they provide to their citizens. The possibility of changing the stable net asset value (NAV) -- the hallmark of money market funds -- to a floating net asset value greatly concerns us. Such a move would be very harmful to state and local governments and the entire MMMF market. The fixed NAV is the fundamental feature of money market funds. Forcing funds to float their value likely would eliminate the market for these products by forcing many investors, including state and local governments, to divest their MMMF holdings, and discouraging others from using these funds." See also, ICI's latest "Money Market Mutual Fund Assets."
