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Senators Express Concerns About Floating NAV

Several Senators, all members of the Senate Banking Committee, recently sent a letter to SEC Chairman Mary Schapiro expressing concerns about efforts to float the NAV of money market funds.  The letter warns that floating the NAV could lead to several adverse consequences, including that:

  • Tax and recordkeeping burdens of investors would increase;
  • Retail investors will have fewer opportunities to access money market instruments;
  • Institutions may turn to private pools for stable-value cash investments, which are subject to less oversight than money market funds;
  • Corporate and municipal financing would likely be severely disrupted which would make it more expensive to raise capital and exacerbate the budget problems of communities throughout the country; and
  • Consumer lending may become less available and more expensive.

Michael Bennet (D-Colo.), Patrick Toomey (R-Pa.), Mike Crapo (R-Idaho), Jon Tester (D-Mont.), Mark Kirk (R-Ill.) and Robert Menendez (D-N.J.) signed the letter.