Yesterday morning, Bloomberg wrote "SEC's Gallagher Calls for Floating Price for Money Funds", which says, "U.S. Securities and Exchange Commission member Daniel Gallagher, who helped derail efforts to tighten rules for money-market mutual funds, said he would likely support a measure forcing the industry to abandon its marquee $1 share price. Requiring money funds to have a fluctuating share price "is an attractive option that I am likely to support," Gallagher, a Republican, said in an interview. The remarks could help revive the debate at the SEC and offer a path toward compromise for SEC Chairman Mary Schapiro, whose proposal ran aground last month. Gallagher said he couldn't vote for Schapiro's plan because its centerpiece was to make the funds hold extra capital. The cushion was too small to protect investors, Gallagher said, leading him to believe the money would be used as collateral in case the funds needed to borrow from the Federal Reserve." The piece adds, "The Financial Stability Oversight Council, an umbrella group of U.S. regulators headed by Treasury Secretary Timothy F. Geithner, may discuss money funds at a meeting tomorrow. Schapiro, a member of the council, has asked the group to consider taking action to stabilize money funds." The article backtracks a bit, saying, "In the interview, Gallagher said his support of a floating share price was contingent on the SEC "fully understanding and addressing" the tax and accounting issues that could arise. Gallagher said a fluctuating share price may need to be coupled with other protections, such as the freezing redemptions option that he and Paredes had suggested. While Schapiro's plan offered the variable share price as one alternative, Gallagher said it was secondary to the capital buffer. The proposal included about 150 pages describing the capital buffer and just 40 pages on the floating share price."
