The Hill's Congress Blog features the piece, "Proposed SEC Money Market fixes are a bad idea". A recent post by Rep. Gwen Moore (D-Wis.) says, "The financial crisis remains fresh in the minds of the American people and the passage of the Dodd-Frank act -- which I supported -- was a positive first step, putting in place the most comprehensive financial regulatory measures since the Great Depression. Attention is now being focused on the Securities and Exchange Commission (SEC) proposal to either "float" the net asset value (NAV) of money market mutual funds (MMFs) or to not permit full redemption of investor funds on demand. As a member of the House Committee on Financial Services, the SEC proposals would critically undermine the viability of MMFs, and undermine the ability for businesses and local governments to find short-term financing.... [R]eforms to MMFs have already helped the industry maintain investor confidence and weather two significant market disruptions: the downgrade of U.S. debt and the Greek/Euro Zone debit crisis. This is why the latest calls for reform are perplexing, since Congress passed Dodd-Frank six months after the SEC amended Rule 2a-7 related to MMFs governance and Congress chose not to modify the fixed NAV at that time. Nonetheless, there have been proposals for additional regulations of MMFs based on the logic that investors in MMFs may mistakenly believe they are federally backed or insured and that MMFs remain susceptible to bank-style runs because they are not insured or backed. The name Money Market Fund does speak for itself. They are funds invested in markets. But if that is not enough, MMFs already must explicitly and clearly disclose that they are not federally backed.... Both SEC proposals would frustrate those aims by either ending cash equivalency by floating the NAV or imposing a pseudo margin requirement on investments in MMFs by not permitting full withdrawal. The SEC is to be commended for the 2010 MMFs reforms, but the most recent proposals to change Rule 2a-7 must be reexamined."
