If the Securities and Exchange Commission's proposed rules governing money market mutual funds see the light of day, corporate treasurers will have to dig deeper for their companies' short-term financing needs. The rules would, in effect, bar money market funds from investing in commercial paper issued by many of the country's largest and oldest companies. While the intent of the SEC is to strengthen the U.S. financial system by regulating money market funds more like banks, critics charge that the commission is wielding a bigger stick than is necessary to tame an industry that needs scolding, at most. They contend that many major American companies' ability to issue commercial paper will be severely impaired, forcing some to abandon this form of short-term debt issuance for more expensive alternative financing. "It's more than likely to drive up the cost of short-term debt for many companies," predicts Holly Koeppel, executive vice president at American Electric Power, a Columbus, Ohio-based utility that provides electricity to customers in 11 states.

AEP falls within the so-called second tier, or A2/P2 category, of commercial paper issuers that would be affected by the SEC's proposal, which is currently out for comment. A2/P2 is a rating of the risk of default of commercial paper. The SEC seeks to limit money market fund investments to the highest quality securities, a tier that would include high-flying A1/P1 issuers, but exclude companies rated A2/P2.

AEP is just one of hundreds of otherwise soundly managed and financially stable companies in the A2/P2 category. Others include such well-known corporate names as American Express, General Mills, Sara Lee, Kraft, Heinz, Philip Morris, Cigna, Lockheed Martin and Nissan, to name a few. "Some of the world's biggest and best companies will be adversely affected," says Anthony Carfang, a partner at Chicago-based consultancy Treasury Strategies.

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