The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:Who Paralyzed the Anti Money Fund Reform Bill? Not Rated 5.0 Email Routing List Email & Route  Print Print
Friday, February 02, 2018

Who Paralyzed the Anti Money Fund Reform Bill?

News summary by MFWire's editors

So much for bringing back the $1 NAV for money funds.

Despite winning bipartisan approval on its way out of committee and 64 co-sponsors from both sides of the aisle, the law that would partially roll back money fund reform seems to have stalled, the Wall Street Journal reports. Yet it could come back in modified form later this year, unnamed House aides tell the paper. In its current form, the bill would undo the 2014 SEC requirement that institutional prime money market mutual funds and institutional government money market mutual funds use floating NAVs.

The fight over the bill exposes differences between several large fund firms. Meanwhile, many fundsters at smaller firms may ignore the battle altogether given that money market funds are largely the province of only titans these days.

On one side of the fight is Federated Investors: a 53-year-old, Pittsburgh-based, publicly traded but family-controlled asset manager. Federated is a big fund firm with $397.57 billion in AUM as of December 31. Yet 66.71 percent of that AUM is in money market products and 46.67 percent is in money market mutual funds, so money funds are a core business for Federated. The bill in question, H.R. 2319 (the Consumer Financial Choice and Capital Markets Protection Act of 2017), is primarily the work of a local Congressman, Representative Keith Rothfus (R-Pennsylvania), whom the WSJ attacks as "fronting for Federated Investors." (The WSJ is not a fan of the bill, characterizing it as "the next money-fund bailout.")

Many local and state government officials and organizations have also lined up in favor of the bill, (more than 300, Rothfus says), complaining about how the post-money fund reform world has made it harder for municipal bonds when so much money shifted out of institutional prime and institutional government money funds thanks to the rule changes.

On the other side of the fight is the Investment Company Institute (ICI), which last month urged the House Committee on Financial Services not to pass the bill. In the letter, ICI chief Paul Schott Stevens writes that the "consensus of [the ICI's] member leadership is that reopening these reforms is not appropriate or desirable." The ICI's board of governors is a veritable who's who of fund firm chiefs from the largest mutual fund shops. The WSJ reports that BlackRock and Fidelity are among the "large fund managers" engaged in "behind-the-scenes" pushback against the bill.

"Opponents say the market has already adjusted to the 2014 requirement and are reluctant to force the SEC to revise it, worried about reopening a bruising fight over the funds' structure that could take years," the paper writes, adding that an ICI memo also discusses concerns that a rollback might lead the Financial Stability Oversight Council (FSOC) to take closer look at money funds.

For the biggest fund firms, money funds are a piece but not a core business, and perhaps the off chance of FSOC scrutiny makes continuing a decade-long money fund fight not seem to be worth it.

Meanwhile, Rothfus says he's not giving up the fight.

"I remain committed to addressing the negative consequences of the SEC's 2014 rule and I look forward to working with leadership on House Passage," Rothfus states, adding that the bill "continues to attract more co-sponsors and supporters from around the country."

Rothfus introduced the bill in May 2017, when it was promptly referred to the House Financial Services Committee (led by Representative Jeb Hensarling (R-Texas). The committee's Subcomittee on Capital Markets held a hearing in November, and after markup on January 17, 2018, the committee 34-21 in favor of the bill. According to the WSJ, five of those votes against the bill came from Republicans, including Representatives Bill Huizenga (Michigan) and Sean Duffy (Wisconsin).

Now, unnamed GOP aides tell the WSJ, the bill probably won't even come to the House floor (never mind pass the House) without changes. GovTrack, citing Skopos Labs, estimates that the bill now has a 27 percent chance of eventually becoming law. 

Edited by: Neil Anderson, Managing Editor

Stay ahead of the news ... Sign up for our email alerts now

 Do You Recommend This Story?

Return to Top
 News Archives
2022: Q2Q1
2021: Q4Q3Q2Q1
2020: Q4Q3Q2Q1
2019: Q4Q3Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Add to My Yahoo!
follow us in feedly

  1. Nicsa webinar - Luxembourg: The FinTech Gateway to Europ, May 18
  2. MMI webinar - How Wealth Firms Can Attract and Retain the Modern Investor, May 18
  3. ICI webinar - New Research Shows "First-Mover" Is a Universal Investor Response — Not Unique to Open-End Mutual Funds, May 18
  4. MFDF webinar - Mutual Fund Director Compensation: The MPI Annual Survey (2022), May 19
  5. 2022 ICI Leadership Summit, May 25-26
  6. ALFI Roadshow to New York, May 25
  7. 2022 IDC Fund Directors Workshop, May 26
  8. Irish Funds Annual Global Funds Conference 2022, May 30-31
  9. WealthManagement Edge, May 31 - June 3
  10. MFDF 2022 Fund Governance and Regulatory Insights Conference, Jun 8-9
  11. 28th annual Expect Miracles East Coast Classic, June 9
  12. 2022 Sohn Investment Conference, June 9
  13. IDC webinar - Cybersecurity for Fund Boards: The Current Landscape, June 9
  14. MMI webinar - Driving Business Value with Artificial Intelligence & Data, June 15
  15. MFDF webinar - Key Takeaways From Morningstar's 2021 Annual Fund Fee Study, June 16
  16. MFDF Director Discussion Series - Open Forum (Chicago), June 21
  17. 2022 MMI Emerging Asset Managers Forum, June 23
  18. MFDF In Focus: Capitol Hill, A Conversation with Congressman Bryan Steil, June 28
  19. Financial Planning INVEST, Jun 28-29
  20. MFDF webinar - Differentiating Mutual-Fund-to-ETF Conversions, July 19
  21. MFDF Director Discussion Series - Open Forum (New York), July 20
  22. 2022 MMI Distribution Leadership Forum, Jul 20-21
  23. MFDF webinar - Fund Boards' Oversight of Investment Performance, July 28
  24. MFDF webinar - Performance, Perception and Manager Selection, September 14
  25. 2022 ICI Tax and Accounting Conference, Sep 18-21
  26. 5th annual Expect Miracles Atlantic Coast Classic, October 3

©All rights reserved to InvestmentWires, Inc. 1997-2022
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use