The mutual fund industry’s argument that new money-market fund rules would hurt companies, states and cities that sell short-term debt has been contradicted in a new Securities and Exchange Commission study.
Should new rules shrink money funds, non-financial companies wouldn’t be significantly affected because they don’t lean heavily on the funds, while banks are well suited to find alternative funding, according to the report prepared by SEC staff for three commissioners. The report also said a reduction in demand by money funds wouldn’t necessarily cause a drop in demand for short-term debt.
Schapiro shelved her plan in August when commissioners Luis A. Aguilar, Troy A. Paredes and Daniel M. Gallagher signaled they would reject it, saying they wanted more study of the issue. The three then asked SEC staff to examine the 2008 crisis, the impact of 2010 reforms and the potential impact of further changes.