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~tate's lfIasllington . 1!l([ 20515

Qtongre,S,S of tile 1!tnitell

May 1,2012

The Honorable Mary Schapiro Chairman Securities and Exchange Commission 100 F Street NE Washington, DC 20549-1090 Dear Chairman Schapiro: We are contacting you to express our concern over potential proposals that would change the way money market mutual funds (MMFs) are currently regulated. We appreciate the attention you have given this important issue, and we encourage the Securities and Exchange Commission (Commission) to consider the impact additional changes to MMFs would have on state and local governments throughout America. As former state and local government officials, we understand how important it is for states and municipalities to have access to the capital markets to fund community projects. These capital needs include infrastructure projects, such as roads and bridges, hospitals, and low足 income housing projects. Our nation ' s states, municipalities and towns rely on the issuance of debt to fund many of these critical public projects and money market funds playa vital rolejn this process. MMFs hold roughly 60 percent of the short-term debt issued by municipalities, making them the largest purchaser of the debt used to finance these important activities. Money ma~ket funds are also a cash management tool and short-telm investment option for states and municipalities. MMFs provide governments an efficient, liquid and highly regulated investment vehicle that can be used to manage shorter-term investment needs. Further, many state and local governments have investment policies in place that require short-term investments to be held in stable value products. This makes the stable $1.00 net asset value (NAY) ofMMFs an important and highly attractive feature for states and municipalities. The Commission's 20 I 0 enhancements to Rule 2a-7 have made money market funds safer and more transparent. In addition to requiring that MMFs disclose their holdings every month, Rule 2a-7 now requires that 10 percent of a fund's holdings have daily liquidity and 30 percent be liquid within a week. As a result of shortening the average maturities of holdings and restricting the ability of MMFs to invest in longer-term securities, these funds are now better able to weather changes in interest rates and market volatility. According to recent press reports, you have indicated that the Commission will soon move forward with reforms beyond the Rule 2a-7 enhancements. We are concerned that some of


the additional refonns you are considering - such as mandating a floating NAV, capital requirements, or imposing a holdback on customer funds - would alter the fundamental structure of MMFs and would, in turn, lead investors to other less-regulated products. Any reduction in demand for money market funds would reduce demand for the securities issued by state and local governments and purchased by MMFs . As a result, states and municipalities would be deprived of a critical funding source and would be faced with increasing debt issuance costs. In the current economic environment, states and municipalities throughout America face a number of financial headwinds and many continue to struggle with their budgets. As state and local officials continue to make difficult budgetary decisions, we ask that the Commission take into full consideration the important role MMFs play in our municipal economies and not do anything that would make it more difficult or expensive for states, towns and cities to raise capital. Thank you for your consideration of this important matter. Sincerely,

~ÂŁ Richard E. Neal Member of Congress

Tom Reed Member of Congress


Frank C. Guinta

Member of Congress

Michael E. Capuano Member of Congress

Steve Chabot Member of Congress

Member of Congress

Member of Congress

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Himes mber of Congress

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~17~e, ~~ Member of Congress


.. Mike Coffman

Member of Congress



Lynn enkins Member of Congress

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John Carney

Member of Congress

ames B Renacci of Congress


Adam Kinzinger Member of Congress

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Member of Congress

Member of Congress

Steve Stivers

Member of Congre


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Member of Congress

Sam FaIT Member of Congress


err R rtenberry Member of Congress

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Mike Kelly Member of Congress


Timothy F. Geithner, Secretary of the Treasury and Chairman of the Financial Stability Oversight Council Ben S. Bernanke, Chairman, Board of Governors of the Federal Reserve System Joe Walsh, Acting Comptroller of the Currency, Office of the Comptroller of the Currency Martin 1. Gruenberg, Acting Chairman, Federal Deposit Insurance Corporation Gary Gensler, Chairman, Commodity Futures Trading Commission Debbie Matz, Chairman, National Credit Union Administration Edward 1. DeMarco, Acting Director, Federal Housing Finance Agency Richard Cordray, Director, Bureau of Consumer Financial Protection Roy Woodall, Independent Member with Insurance Expertise, Financial Stability Oversight Council Luis A. Aguilar, Commissioner, Securities and Exchange Commission Troy A. Paredes, Commissioner, Securities and Exchange Commission Daniel M. Gallagher, Commissioner, Securities and Exchange Commission Eileen Rominger, Director, Securities and Exchange Commission, Division of Investment Management Robert E. Plaze, Deputy Director, Securities and Exchange Commission, Division of Investment Management


According to recent press reports, you have indicated that the Commission will soon move forward with reforms beyond the Rule 2a-7 enhanceme...

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