The controversy over money market fund reform may be over for the moment as the SEC announced plans to scrap a vote on new proposals.
This week, the SEC chairman went to Congress about the possibility of destabilizing runs on money market funds.
The debate over money market funds has heated up recently as regulators scuffle with the fund industry.
Money market funds are designed to be safe investments that maintain a $1 per share net asset value, or NAV, at all times. Unlike money market accounts offered by banks though, money market funds are not insured by the FDIC. That means it is possible to lose money in a money market fund if the
In the global economy, events on the other side of the world can have big impacts here at home. For instance, the European debt crisis has loomed over domestic money market funds since the beginning. Most people in the United States aren’t directly holding debt securities from the struggling European countries known as the PIIGS,
U.S. prime money market funds reduced investments in European banks by 14 percent between August and September, the Wall Street Journal reported today in the story, “Money Funds Shun European Banks.” That data comes from a report from Fitch Ratings released today. According to the press release from Fitch, European bank holdings make up 37.7
Though the second Greek bailout program engineered by the European Union and the International Monetary Fund is ongoing, an increasing number of reports point to the possible eventuality of a default. Today, Friday, Germany’s finance minister said the second bailout package may need to be re-evaluated as debt inspectors found that the country is behind
Remember back in 2008 when the net asset value of one money market mutual fund dipped below $1? The Reserve Primary fund broke the buck in September of 2008 in the wake of the Lehman Brothers implosion. Now money market funds could be looking at a similar scenario, this time thanks to events across the
Last week ratings agency Moody’s announced via press release that it is reconsidering the rating system for money market funds. Also on September 7, the agency published a paper soliciting investor comments, “Moody’s proposes new money market fund rating methodology and symbols,” and explained the rationale for the proposed change. “In September 2008, 31 rated
A new report from Moody’s has found that back in 2008, “breaking the buck” was a problem for substantially more than one money market fund. In fact, many money market funds struggled at that time. In September 2008, the net asset value of Reserve Primary Fund fell below $1 per share. According to the Financial