SEC Money-Market Move Enhances Stability for Investors

WASHINGTON -- The SEC approved a long-awaited set of rules on Wednesday aimed at shoring up money-market mutual funds, opting for a dual approach that seeks to align trading prices with underlying market values and guard against destabilizing runs.

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Comments (1)
I believe the cause or "trigger" of the collapse of the short term credit markets is more aptly attributed to the re-implementation of the "mark to market" accounting rules that directly led to the bankruptcy of Lehman Bros., not the "breaking of the buck" by the Reserve Fund. The Reserve Fund "broke the buck" because of the devaluation of the Lehman assets it held at the time Lehman went belly up (triple A paper on Friday, forced into bankruptcy on the following Monday). Interestingly enough, clients who were invested in the Reserve Fund that had to endure this nightmare, recovered over 99% of the amount invested at the time of the Fund closure. If it had not been for "mark to market" accounting, the drop in value of less than 1% would not have cause the "breaking of the buck" and no one would have experienced any of that nightmare.
Posted by RL | Wednesday, July 23 2014 at 5:37PM ET
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