Fundsters may continue to push back against the SEC's proposed new money fund regulations, but a prominent ex-brokerage executive just weighed in on the side of the SEC. In today's Wall Street Journal, Bank of America and Citigroup alum Sallie Krawcheck penned an opinion piece in support of the two big proposals under consideration, namely switching to floating net asset values (NAVs) and adding capital buffers.

Krawcheck -- who most recently led BofA's global wealth and investment management unit, which includes wirehouse Merrill Lynch -- stressed the fact that investors generally see money market mutual funds as cash, not as non-guaranteed products.

"In the court of public opinion -- not to mention among arbitrators -- implicit guarantees like not breaking the buck can become viewed as explicit regardless of what written legal disclosures may say," Krawcheck wrote, pointing for comparison to the billions of dollars of post-financial-crisis settlements relating to auction rate securities.

"A floating net asset value would go a very long way toward signaling that the investment principle is not guaranteed," Krawcheck added. "And if the industry wants to improve the safety of the business and of that guarantee, additional capital likewise goes a long way. Nothing in financial services is as dangerous as a guarantee without capital backing it." 

Edited by: Neil Anderson, Managing Editor


Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE