Bloomberg resumes its odd preoccupation with Paul Volcker and attacks on money funds with "Goldman Sachs Wimps Out in Buck-Breaking Brawl". It says, "Throughout the financial crisis, Goldman Sachs Group Inc. extolled the use of market prices to value holdings, saying this instills needed discipline. The firm's hard-line stance turned to mush, though, when it came time to end a market myth that fueled 2008's meltdown. Goldman, along with the mutual-fund industry, argues that it is fine for money-market funds to use historical values, rather than market prices, to value holdings. This helps money-market funds maintain a stable price of $1 a share. The problem: the $1 share price gives investors the false impression that money-market funds are like bank accounts and so can't lose money. That myth was shattered in 2008, and the resulting panic worsened the credit crunch, forcing the government to backstop these funds." It adds, "At a meeting last week, the SEC endorsed beefed-up disclosures for money-market funds, along with other technical changes such as requiring funds to boost cash holdings. It stopped short, though, of even proposing that funds be required to post values that wouldn't always neatly show up as $1 a share.... More forceful action is needed, though, especially given that there have been calls for more than a year, most notably from a group run by former Federal Reserve Chairman Paul Volcker, to require that money-market funds either use floating values -- and so prepare investors for the idea that these instruments can lose money -- or be regulated as if they are bank products."
