The U.S. Chamber of Commerce hosted its "7th Annual Capital Markets Summit" yesterday, and published a "Financial Regulatory Reform: 2013 Report Card." The Chamber gave "Money Market Mutual Fund Reform" a 'C-' grade, and comments, "Money market mutual funds (MMMFs) play a critical role in meeting the short-term capital and cash flow needs of American businesses. Despite reforms made in 2010 by the SEC that increase the transparency of funds and place stricter parameters on acceptable investments, some are calling for additional changes. The Chamber supports reasonable efforts to further strengthen the resiliency of MMMFs, but vigorously opposes reforms that would destroy or severely curtail their utility for companies and other users of money funds."
It explains, "MMMFs are well positioned to endure financial market stresses, including the domestic debt-ceiling crisis and the European sovereign debt crisis. Reform options considered in 2012 by the SEC did not receive a majority of support by the Commission in large part because they would have weakened rather than strengthened this product. At the SEC Chairman's request, the Financial Stability Oversight Council (FSOC) sought comment on the SEC's reform options but also invited comments on additional alternatives. The Commission has since indicated it will re-visit the issue and consider new approaches."
The Chamber continues, "CCMC believes the SEC should begin by clearly identifying the problem or problems it seeks to address, and ensuring that its proposals effectively address those problems without jeopardizing the fundamental role that MMMFs play as a source of both short-term investment and financing for Main Street businesses, state and local governments, and other organizations."
They add, "To bring up the grade, the SEC should do the following: Define clearly the perceived problem to be solved and conduct a thorough analysis of potential reforms to MMMFs to understand the broader economic impacts and the company specific operational impacts, notably the tax and accounting issues that would ensue from floating the Net Asset Value. Ensure that any regulatory changes to MMMFs seek to strengthen these funds while preserving their utility to end-users."
Finally, the report card tells us, "To bring the grade up, the FSOC should do the following: Allow MMMFs to stay within the jurisdiction of the SEC and ensure that any changes in regulation are independently implemented by the SEC."
In other news, Reuters wrote "`Fed's Lacker: delay on reforming money market funds a problem" yesterday, saying, "Richmond Federal Reserve Bank President Jeffrey Lacker said on Tuesday that he was "chagrined" by the slowness in agreeing on reforms to money market mutual funds, which he warned was a serious threat to financial stability." Reuters quoted, "It really is a major piece of unfinished businesses," he told an audience at the University of Richmond."
