The Hill News

The financial crisis remains fresh in the minds of the American people and the passage of the Dodd-Frank act - which I supported -- was a positive first step, putting in place the most comprehensive financial regulatory measures since the Great Depression. Attention is now being focused on the Securities and Exchange Commission (SEC) proposal to either “float” the net asset value (NAV) of money market mutual funds (MMFs) or to not permit full redemption of investor funds on demand. As a member of the House Committee on Financial Services, the SEC proposals would critically undermine the viability of MMFs, and undermine the ability for businesses and local governments to find short-term financing.  
 
The proposed reforms of MMFs are rooted in the peak of the 2008 financial crisis when the Reserve Primary Fund, which had exposure to Lehman Brothers, “broke the buck,” or could not meet redemptions at the fixed NAV rate expectation of $1.00 in, $1.00 out.! The federal government announced that it would stand ready to back MMF investor claims, as they are not federally backed or insured. In the end, no other funds broke the buck, no federal money was used to “bailout” MMFs, and investors in the Reserve Primary Fund were paid $.99 per $1.00 investment.

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