I have previously covered these proposals and won't go into a lot of detail today, except to say that so far as they violate the primary tenants of a money fund, daily liquidity at par with a market yield, they will end money markets funds as we know them if they are proposed and enacted. The consequences will be severe, including higher funding costs for states municipalities and other government entities, leading to either higher taxes, cuts and services or more money moving into the largest already too-big-to-fail banks, and money moving to far less transparent unless regulated investments including separate accounts, offshore accounts and things perhaps we have not even thought of.These Draconian measures are based on demonstrably false premise the money funds are prone to destabilizing runs and somehow backed by the taxpayers. There's no proof that either of these ideas is true. There is, however, the unparalleled 40-year record of successful money management providing real tangible benefits to our financial system.
Federated Investors Management Discusses Q2 2012 Results - Earnings Call Transcript
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