(Cont’d…)
“Imposing a floating NAV [net asset
value] on money market funds is simply not in the best interests of American
investors or businesses,” said Dale Brown, president and chief executive of FSI.
“This measure could unnecessarily undermine one of the key instruments that
Main Street investors count on for stability and liquidity, while depriving
businesses and governments of a crucial source of financing.”
According to Schapiro’s statement, some
of the commissioners suggested a concept release, which is used to solicit the
public’s views on securities issues so that that they can evaluate the need for
future rulemaking.
The
SEC has been wrangling with the issue of structural reform of money market
funds for more than two years, and a concept release would not advance the
discussion, Schapiro said. “The public needs concrete proposals to react to,”
Schapiro said.
Schapiro’s statement contained hints
that the issue is far from over, and that she would look for other regulators
and agencies to jump into the fray. “Other policymakers now have clarity that
the SEC will not act to issue a money market fund reform proposal,” she said.
Money market funds operate without a
net, she contended. Pointing to the financial crisis of 2008-09, Schapiro
stated that one of the downturn’s most critical lessons is the need to identify
potential systemic risk, or a possible industry bailout,
and act on it.
Financial regulators from both parties
have spoken out in support of structural reform of money market funds,
according to Schapiro, as have independent observers, such as academics and the
financial press. “The issue is too important to investors, to our economy and
to taxpayers to put our head in the sand and wish it away,” she said. “Money
market funds’ susceptibility to runs needs to be addressed.”
Jill Cornfield