Comments and lobbying over the SEC's "Proposed Money Market Fund Reforms" continues. We just noticed the posting of "Preserving the Ability of Money Market Funds to Invest in Second Tier Securities", which was submitted by the U.S. Chamber of Commerce's Center for Capital Markets Competitiveness. The Powerpoint posted "challenges the basis for the proposed prohibition" and examines the "negative and unintended consequences of the proposed prohibition." It says of the $46.8 billion market, "The proposed prohibition would not have prevented the events of September 2008." It adds, "100% backstop credit facilities are required for the A2/P2 rating, but not for A1/P1" and that the "default risk of A1/P1 is very similar to A2/P2". Removing "Tier 2" would cause: a "reduced ability to diversify 2a-7 portfolios," "decreased flexibility and increased costs," and, a "domino effect" as "firms manage both 2a-7 and non-2a-7 money for cash management vehicles."
