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Money Fund Rollback Gains Traction in Congress

Bipartisan support is growing for a bill that would roll back money-market fund reform.

Eight representatives signed on as co-sponsors of the Consumer Financial Choice and Capital Markets Protection Act last week, according to the Library of Congress’ website, Although similarly named, the bill is different from the Financial Choice Act, which aims to roll back many of the provisions of the Dodd-Frank Act.

So far, seven Democrat and eight Republican representatives are co-sponsoring the bill, which aims to revoke a slew of reforms to money-market funds that took effect last October.

[…]Meanwhile, money managed by funds that invest in government and agency debt totaled $1.54 trillion, a 2.3% decrease.

Still, that rebound is only a fraction of the money that fled the funds, said Anthony Carfang, a managing director with consulting firm Treasury Strategies. Curtailing reform could help pump much more money into the funds and give a short-term liquidity cushion to companies that borrow in the commercial paper market if the economy contracts and credit gets squeezed, he said.

“Money funds lost a $1 trillion shock-absorber,” he said. “It was money available as liquidity in the private sector.”

Read the full article on The Wall Street Journal (subscription needed)

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