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September 19, 2013

September 18,2013 – House Financial Services Subcommittee on Capital Markets hearing entitled "Examining the SEC's Money Market Rule Proposal."

On the same day the public comment period ended for the money market rule, the Capital Markets Subcommittee conducted a hearing on proposed regulation dealing with the financial stability of the money market industry. In sum, the proposed regulation requires prime money market funds to adopt a mark to market approach to asset valuation rather than the stable $1 per share value currently used by the industry. The rule also permits money marker fund directors to impose liquidity fees and to utilize redemption delays in time of market economic stress.

The industry witnesses argued against the so-called “floating” asset aspect of the proposed regulation and only Sheila Bair suggested that the new rule and related changes would benefit the industry and the taxpayer’s interests in the long run.

Member of Congress on the Subcommittee cautiously asked questions, seemingly unsure how to proceed between the somewhat competing interests of the popular industry and the need to protect taxpayers. They did rally around the position of various state and local municipalities who request that any changes not affect their ability to use money market funds as a cash management tool. No changes in this area are contained in the proposed rule.

Congressional Activities

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