The latest addition to the SEC's "Comments on Proposed Rule: Money Market Fund Reform; Amendments to Form PF" shows no letup in the opposition to the floating NAV option. The latest comment is from Andrew Berger, Director, Government Affairs, Association of Indiana Counties. Berger writes, "I want to register my strong opposition to the proposal put forth by the Securities and Exchange Commission to force institutional prime and tax-exempt money market funds to abandon the stable $1.00 net asset value and "float" their per-share price (the "floating NAV"). Money market funds play a vital role in both cash management and public financing for municipal governments. As investors, state and local governments rely upon money market funds (MMFs) as the most flexible way to invest and accumulate cash in anticipation of short-term needs. MMFs provide a current market yield on a diversified, fully disclosed portfolio. While municipalities invest in MMFs, these funds also invest in America's cities, counties, and states. Money market funds hold almost three-quarters of all short-term municipal debt, providing financing for operations and public works. These funds' ability to pass through tax-exempt interest to investors helps ensure an active and liquid market for state and local debt issues. The convenience and simplicity of the stable share price are key features of MMFs. Groups representing millions of investors have said that impairing these features will drive investors and their cash out of these funds. Indeed, many state and local governments are barred from using "floating value" instruments for cash management. Driving investors out of these funds will limit financing options available to state and local governments, which could lead to higher financing costs, reduced services, increased taxes, and layoffs. Impairing MMFs could deal a severe setback to an economy in recovery. I urge the SEC not to change the fundamental nature of money market funds and undermine this important source of investment and public funding by imposing a floating NAV."
