Bloomberg writes "Floating Money Fund Price May Backfire, Panel Says," which says, "Forcing money-market funds to give up the stable $1 share price that helped the industry attract almost $3 trillion may lead to unpredictable investor responses, according to an advisory body to the Obama administration. While a floating net asset value may reduce the risk of a run on money funds during a crisis, such a change could push investors into unregulated substitutes and hurt the industry's ability to supply companies with short-term credit, according to a report published today by the President's Working Group on Financial Markets. The report, commissioned by the U.S. Treasury Department in June 2009 after the failure of the $62.5 billion Reserve Primary Fund caused a run on the industry, examines potential regulatory changes aimed at making money funds more stable without endorsing any option. The Working Group said it would ask the Financial Stability Oversight Council, established by the Dodd-Frank reform bill, to identify the best choices and that the Securities and Exchange Commission would seek public comments." "The report may raise more questions than it answers,” Bloomberg quotes Peter Crane, president of Crane Data LLC, a money-fund research firm in Westborough, Massachusetts. "It doesn't appear to push policy in any one direction." See also, "ICI Responds to PWG Report on Money Market Funds" and ICI's weekly "Money Market Mutual Fund Assets".
