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FBN's Peter Barnes on the money market fund industry trying to prevent people from withdrawing funds.
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There's a question for you if it is your money you should be able to add to it right well a new -- -- Washington would make it harder.
For money market fund customers to get their own.
Cash -- wonder why that's happening and Peter Barnes is joining us from inside the -- with a story that's going to get you upset Pierre.
Well -- hey guys are regulators say they are just trying to make trillions of dollars in money market funds safer for investors now the funds as your -- -- typically valued like cash at a dollar a share but during the financial crisis in 20081.
Of the big funds the reserve fund.
Broken the buck because it had invested in short term debt Lehman Brothers which went bankrupt.
Customers panicked there was a run on money market -- so the treasury had to provide a tax -- backstop.
To halt -- regulators and of course taxpayers don't ever want to have to do that again so they issued some reforms for the industry in 2010 but they've been battling the industry to do more.
Yesterday the industry proposed circuit breakers basically to prevent customer runs during a crisis the funds could suspend redemptions for up to thirty days for example or if customers really -- their money.
They could pay a 1%.
Redemption -- something called a liquidity -- The industry opposes some -- -- ideas from the regulators such as letting asset values -- below a dollar holding back some customer cash for a short waiting period until things settle down or requiring the funds to hold capital like banks.
The regulators are looking at the industry's proposal but they worry quote.
Standby liquidity fees and temporary gates may increase the risk of preemptive runs.
By investors who would be motivated to redeem their shares before a fee or -- gate.
Is triggered Sherlund Dennis.
Somehow more regulation is gonna solve the problem with if there's another financial crisis makes so much sense Peter thank you.
Peter -- -- -- Washington.
