You're watching...
Former SEC Commissioner Paul Atkins on whether money market funds need further regulations.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
-- held belief that money market funds are safe way for individual investors to stash their cash.
But on Capitol Hill today SEC -- Mary Schapiro testifying before the senate banking committee.
Expressing reasons for concern.
Money market funds may not be.
As safe as you think joining me now former SEC commissioner Paul Atkins founder and CEO of -- -- global partners.
Welcome back to the show it's always great to have you here Paul.
-- before we get into this hearing.
With the SEC commissioner I I want to ask you about what's going on today with Moody's downgrading fifteen banks and one of the issues that's come up this afternoon is.
Might this impact money market finds in any way.
Should individual investors be paying attention to this.
Well I don't think it's gonna affect many markets and mutual funds I mean some of them could be holding paper these banks but.
The paper's very short term and you -- it's not like these banks are declared insolvent or anything so.
The impact of that movie on the backs there as borrowers because often pay perhaps a bit more money to a -- their money.
Our eight wells that that's that's it that makes me feel a little bit better anyway -- -- how does it it's not to have.
Rooms that are well -- from your lips to God's -- I -- talk a bit about Mary Schapiro and her testimony today she seems to be indicating an.
I you know I think this is critical for individual investors because we all have money market funds.
She says as many as 300 different funds have had to backstop those funds they face may be breaking the buck.
You put -- dollar into money market fund is supposed to get a dollar back they had to support those funds.
Over several decades here's what she had to say -- -- get you to respond.
Two years ago we -- the SEC passed a series of measures to increase the resiliency of money market funds.
By instituting liquidity standards reducing maturities and improving credit quality but while these steps have been widely hailed.
I said -- is still believe that more needs to be done.
That's because -- incentive to Iran clearly remains.
So Paul what do you say is there a threat of Iran on these funds.
No I don't think so and I guess my response to chairman is where's the beef.
She is citing this internal SEC study but we haven't seen it and so she talks about.
300 funds over the last forty years that with a sponsor has had to step in.
To some extent we don't know what that means.
And that can be a lot of things that doesn't necessarily mean they were.
Are ready to break the buck -- can be all sorts of things -- the sponsors substituting paper or before one talk for another because of liquidity reasons are.
Where there -- whole bunch away.
Those companies went out of business I mean that was the issue for some of those banks.
And her testimony which had a chance to read this afternoon some of the banks -- -- yeah.
Only one.
There was only well there was only one money market mutual fund that did break the dollar but investors got 99 -- -- I'm back.
And then her measure is whether they had trouble are not not whether they went out of business obviously but I.
But then I think she needs to show us what her back -- -- what she has not done yet at all.
-- so she's saying that we need more regulation I -- you think now.
Brought -- -- but she went through and in 2010.
She basically.
The commission.
Put in much more strict standards and respect money market funds.
And those of a lot of the last two years.
Seem to have held up very well through some pretty turbulent times in the marketplace.
Paul Paul as a practical matter.
You -- you look at this market place -- an individual investors is also a lot of companies that that park money in and money market funds to but individual investors think these things.
It's like putting money in the bank in a mattress they think that.
There's no way they'll ever lose any money and I think maybe.
The promises made be too big do you agree.
No well in -- I don't because if you look at the disclosure.
All of these prospectuses it's very clear this is an investment you could lose money it's a mutual fund and and people are going there because.
It's safe it's managed there's a good history of not that these things not to going belly up if -- chairman -- really thinks is a problem that investors don't understand that.
And that is a disclosure issue which the SEC.
Has four priority.
To go and change.
-- well you know -- it's always great to have you on the show thanks for helping us out tonight.
-- --
