A top Treasury official weighed in yesterday on her thoughts on money market reform.
"Further steps are needed to improve the stability of the industry and reduce money funds' susceptibility to runs, said Mary Miller, assistant secretary for financial markets at the U.S. Treasury. She was speaking
at the National Federation of Municipal Analysts conference
on Wednesday at the Four Seasons in Las Vegas.
Her brief comments on money market funds also conceded that money market funds are "more resilient today than they were in the lead up to the crisis."
Her comments on money funds included:
"Both SEC Chairman Mary Schapiro and Federal Reserve Chairman Ben Bernanke have recently expressed concerns with the inherent susceptibility of money market funds to liquidity runs during times of stress. Indeed, money market funds contributed to instability during the financial crisis in 2008 and at the time, the previous Administration was forced to intervene to prevent a widespread run. Since then, the SEC has taken actions to reduce the risk of this industry by adopting new portfolio credit, maturity, and liquidity requirements through 2a-7 reforms in February 2010."
"However, while money market funds are more resilient today than they were in the lead-up to the financial crisis, as noted in both the Presidentís Working Group Report in 2010 and the Financial Stability Oversight Councilís 2011 Annual Report, further steps are needed to improve the stability of the industry and reduce money fundsí susceptibility to runs. The SEC and other members of the Financial Stability Oversight Council (FSOC) are actively discussing the most appropriate way to affect this, while preserving the usefulness of these funds for investors and issuers, including those in the municipal market."
Sean Hanna, Editor in Chief
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