The Chamber of Commerce for Capital Market Competitiveness
organized a letter writing campaign against the SEC's money market fund proposal. The two letters, one signed by over 50 business organizations and the other signed by mayors from cities and towns across the country, were sent yesterday.
The Chamber of Commerce will submit their own letter detailing its particular concerns and have Jim Gilligan
, assistant treasurer with Great Plains Energy
testify on its behalf before the House Financial Services Committee on September 18.
The first letter was signed by many regional Chamber of Commerces, National Association of Corporate Treasurers
, Brandywine Communications
, FMC Corporation
, Time Warner
, The Boeing Company
and Noble Energy
, to name a few.
The letter reads, "We strongly urge the SEC to refrain from finalizing any mandates that would fundamentally alter the structure and nature of MMMFs--a vital, liquid, cash management tool. Regulatory changes contained in the SEC's proposed rulemaking--most notably the floating NAV requirement for institutional prime funds and attendant changes in accounting treatments--would significantly discourage many of us or the business we represent and other investors from using MMMFs and have reverberation that hampers economic recovery…The simple fact is that most business will not invest their cash in a floating NAV."
The second letter was signed by 11 mayors, which includes the mayors of Baltimore, Maryland, Covington, Kentucky, Mesa, Arizona, Arlington, Texas, Irving, Texas, Fort Worth, Texas, Salt Lake City, Utah, Raleigh, North Carolina, Cincinnati, Ohio, Racine, Wisconsin, and Louisville, Kentucky. The Metropolitan Mayors Caucus in Chicago, Illinois, also signed the letter.
The mayors argue that adoption of a floating NAV would undermine the value of these funds for all investors and weaken the short-term funding for municipal governments, stressing as Charles Schwab
did in its letter, that municipal money market funds did not experience redemption during the financial crisis.
, executive director of the Chamber's Center for Capital Markets Competitiveness, told MFWire
, "The Chamber has serious concerns about changes to the product that fundamentally alters the structure and nature of MMFs and, in effect, from a corporate treasurer perspective, would strip away the benefit of investing in them. The floating NAV is one such proposed change."
The Chamber of Commerce for Capital Market Competitiveness will release a more detailed critique of the SEC proposal next week.
Two major companies,
] , had comments on money fund reform this week as well. Schwab agreed with some of the proposals' aims, such as separating institutional and retail investors, but disagreed
with its $1 million redemption limit and its inclusion of municipal money funds in the floating NAV part of the proposal. Fidelity officials met with the S.E.C. on August 16, telling regulators that U.S. municipal financing costs could increase from $1 billion to $13 billion as a result of the reform, Reuters
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