St. Louis Post-Dispatch writes "Money market funds mix low yields with high controversy". It says, "Money-market funds aren't making much money for anybody right now, but they're becoming a hot issue in Washington. The Securities and Exchange Commission is about to propose rules designed to bolster confidence in the funds. Its goal is to prevent a repeat of 2008, when one fund's losses caused a run on other funds, forcing the government to implement a temporary insurance program. The SEC hasn't made a formal proposal yet, but the mutual fund industry is already accusing the agency of regulatory overkill. The industry worries that drastic changes could cause investors to pull out much of the $2.7 trillion they hold in money market funds. Certainly no one invests in money funds today for the yields, which average just 0.03 percent.... The SEC reportedly is considering three types of new rules: A floating share price, a 30-day hold on part of each investor's account, and higher capital requirements.... The fund industry is gearing up to fight the proposed rules. Paul Schott Stevens, president of the Investment Company Institute, a trade group, posted a commentary last week saying that the proposals would "drive fund sponsors out of the industry ... and leave the remaining sponsors with a product that few investors or their financial advisers will use." The piece quotes, "Peter Crane, founder of fund-tracking firm Crane Data, thinks none of the ideas will be implemented. SEC Chairman Mary Schapiro wants tighter regulations, but it's not clear whether she has enough votes on the commission, or whether the rules could withstand a legal challenge." Crane says, "The thought that the SEC is going to harm 30 million investors is ridiculous. It's one of the most powerful voting blocs in the country: people with money."
