The ICI probably isn't going to be very happy with the Wall Street Journal this morning.

That's because the financial news giant published an editorial today endorsing some of the proposed changes to money market fund regulations currently being considered in Washington:

The council's "Alternative One" for reform is the best and the simplest: Allow the share prices of money-market mutual funds to float, like the prices of other funds. Since money funds are not insured deposits, investors should understand that they are buying securities that can lose value. The industry has been allowed to employ a novel accounting technique that lets money funds report a fixed value of $1 a share, even if the underlying assets are worth slightly less. In a crisis, the incentive for investors is to run if they can get out the door with $1 before the fund acknowledges reality.

On the other two ideas for regulation, the WSJ is less sure of a positive effect, believing the industry position that requiring a 30-day delay on some withdrawals will in essence eliminate money funds customer base.

For more on the Journal's positions, read the full editorial here. 

Edited by: Ben Geier


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