SEC Chairman Withdraws Efforts to Reform Money Market Mutual FundsAfter two years of insisting on further changes to money market mutual fund rules, SEC Chairman Mary Schapiro stated last week that she did not have the votes and would therefore stop seeking. The reforms could have significantly changed money market mutual funds, potentially making them unsuitable as a primary investment and cash management tool for state and local governments.
The GFOA and the state and local government community have steadfastly opposed proposals that would have replaced the stable net asset value with a floating net asset value, a change that would have forced governments into other financial products that would have been more risky and more costly. In addition, money market mutual funds are the primary purchasers of short-term municipal debt, so this kind of change could have increased issuance costs, as the funds would have limited the buying power of these investments.
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