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Securities and Exchange Commissioner Troy Paredes, shown above at MMX 2013 in Orlando, Fla., addressing questions posed by conference co-chairmen Brian Yeazel and Brian Reynolds, expressed the need to focus on data analysis and the costs and benefits of any proposed additional reforms to money-market funds. He noted that a floating-NAV requirement would not prevent a “run from risk” and suggested that possibly only institutional prime funds would be subject to any changes made to Rule 2a-7.
Below we provide insights from several MMX presenters who spoke with iMoneyNet Managing Editor Mike Krasner as the three-day March event concluded. They were Nancy Prior, president of Money Markets at Fidelity Investments; Rick Holland, managing director and client portfolio strategist at Charles Schwab Investment Management; Debbie Cunningham, executive vice president and chief investment officer of Taxable Money Markets at Federated Investors; and Brian Kalish, director and finance practice lead at the Association for Financial Professionals.
 Nancy Prior Fidelity Investments Listen |
 Rick Holland Charles Schwab Investment Management Listen |
 Debbie Cunningham Federated Investors Listen |
 Brian Kalish Association for Financial Professionals Listen |
Debbie CunninghamU.S. CHAMBER OF COMMERCE HIGHLIGHTS PAPER ABOUT MMF AMORTIZED-COST ACCOUNTING, AUTHORED BY FORMER FASB CHAIRMAN.
We present audio clips below featuring Dennis R. Beresford, former chairman of the Financial Accounting Standards Board (January 1987 through June 1997), during a Nov. 1 news conference detailing his recently published paper: “Amortized Cost is ‘Fair’ For Money-Market Funds.”
Beresford is Ernst & Young executive professor of accounting at the J.M. Tull School of Accounting, Terry College of Business at the University of Georgia.
Delivered under the auspices of the U.S. Chamber of Commerce Center for Capital Markets Competitiveness, the paper defends the use of amortized-cost accounting methods for money-market mutual funds.
Here Beresford speaks to how Rule 2a-7 restrictions apply to securities in money-market funds and why their implementation makes a “reasonable case” for amortized-cost accounting for money-market funds. Listen
Beresford stated his case for amortized-cost accounting methodology for money-market funds.Listen
Read more about Beresford’s paper in Money Fund Report® (Issue #1926, 11/9/12). Access his paper at www.centerforcapitalmarkets.com.
HOSTED BY THE AMERICAN ENTERPRISE INSTITUTE
The American Enterprise Institute hosted a conference titled “Do Money-Market Funds Create Systemic Risk?” on June 28 and here we present some comments made by participants.
Peter J. Wallison, co-director of AEI’s Program for Financial Studies, served as moderator. Wallison has written several books and is of the belief that money-market funds were “innocent bystanders” during the financial crisis (see Money Market Insight™, December 2011). Here he explains that SEC Chairman Mary Schapiro has taken what happened to a Reserve fund out of historical context to warn about future dangers if money funds continue as is: Listen
Melanie L. Fein of the Fein Law Office has written “Shooting the Messenger: The Fed and Money-Market Funds.” Here she tells us what the world would be like if money-market funds “ceased to exist”: Listen
Jeffrey Gordon, professor at Columbia Law School and co-director of its Center for Law and Economic Studies, speaks here to what he described as a two-sided run. The first occurs when investors redeem their shares. The second, “less well-understood” side of the run occurs when money-market funds, “crucial funders” for financial and nonfinancial entities, opt not to roll over commercial paper and other instruments at the hint of default by a dealer or other entity. Here Gordon talks about the need to provide the fund with “first-loss protection” when this happens: Listen
Ed Greene, an attorney with Cleary, Gottlieb, Steen & Harrington, believes there cannot be an exclusive reliance on sponsor support for money-market funds. Here he refers to SEC Chairman Schapiro’s estimate of 300 incidences in which money-market funds received sponsor assistance, and assesses the wisdom of Jeffrey Gordon’s call for distinct A and B money-market fund shares: Listen
Paul Schott Stevens, president and CEO of the Investment Company Institute, also spoke at the conference. Here he talks about the number of bank failures compared with the number of times MMFs have “broken the buck,” and speaks about how much has been invested in money funds without loss of principal: Listen
Here Paul Schott Stevens of ICI renews his argument that deeming money-market funds as systemically-important or implementing suggested SEC reforms would have consequences for funds and investors, and could pose risks themselves:
Listen
You may view the AEI event in its entirety at AEI Events.
