Leading U.S. business group opposed to new money fund rules
(Reuters) - The U.S. Chamber of Commerce, which represents thousands of large and small businesses, told regulators it is opposed to additional reform of money market mutual funds, a significant source of funding for many of its members.
Joined by representatives of local governments and non-profit groups, the trade group said in a letter on Wednesday that changes being considered by the Financial Stability Oversight Council would damage the economy.
"The regulatory changes being considered will have a significant and adverse impact on the vitality of the organizations that we represent — American businesses, State and local governments, and nonprofits — that rely on (money market mutual funds) as a secure, efficient means to provide short-term funding for business expansion, daily operations, and critical infrastructure maintenance and expansion," the letter said.
The chamber has long been opposed to proposals that would require money funds to set aside capital against possible losses or switch from a fixed $1 per share price to a floating price. The FSOC, headed by U.S. Treasury Secretary Timothy Geithner, is considering such changes after a similar effort by the Securities and Exchange Commission collapsed in August.
Regulators say additional safeguards are needed to prevent a destabilizing, panic-driven run of withdrawals from the funds in times of turmoil, as happened during the recent financial crisis.
Major money fund managers such as BlackRock, Federated Investors and Charles Schwab have also largely opposed the regulators' proposals but recently have sought to find a compromise solution.
(Reporting by Aaron Pressman; Editing by Dan Grebler)