Another SEC Comment letter, this one from 39 Congressmen and labeled, "Tom Reed, et al., Members of Congress", written in late October (but posted in November), says, "We are writing to express our concern about the Securities and Exchange Commission's (SEC's) proposed changes to the regulation of money market mutual funds (MMFs) and the negative impact these changes may have on state and local governments. As former state and local government officials, we are well aware of the important role MMFs play in funding critical infrastructure and community projects throughout the country. Last year, many of us wrote to SEC Chairman Mary Schapiro asking the SEC to consider the impact of further MMF regulation on municipal financing. We were disappointed to see that the SEC's proposal would make harmful structural changes to municipal MMFs, and we urge you to consider exempting municipal funds from new regulations that would adversely affect state and local governments and taxpayers alike. Municipal MMFs play a critical role in providing state and local governments with affordable short-term funding to finance important local projects, such as highways, hospitals, colleges and water treatment facilities. In fact, municipal MMFs provide more than two-thirds of the short-term funding for such projects, making them the largest purchaser of short-term municipal debt. The SEC's proposed regulations will shrink this source of funding, leading to significantly higher borrowing costs and complications for states and municipalities. The SEC already implemented extensive reforms in 2010, which substantially improved the resiliency, safety and transparency of all MMFs. Yet on June 5, the SEC proposed additional regulations that would fundamentally alter the structure of certain funds by requiring them to abandon their stable $1 net asset value (NAV) and move to a floating NAV."
