Additional regulation of money-market mutual funds could increase short-term borrowing costs for state and local governments, leading municipalities to raise taxes or cut spending on infrastructure and other critical projects, according to a paper released Monday by a Georgetown University professor.
In a 15-page report called “Money Market Mutual Fund 'Reform:’ The Dangers of Acting Now,” James J. Angel, associate finance professor at Georgetown University’s McDonough School of Business, said money market regulations being considered by the Securities and Exchange Commission and other agencies could transform the industry in ways that would “severely damage municipal finance” and potentially hinder the country’s economic recovery.
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