Money Markets: Would Floating Prices Sink the Industry?

The US Treasury Department granted some relief to money market fund investors beginning last September. I wrote about the extension of relief measures in April. Now the Securities and Exchange Committee (SEC) is getting in on the action.

The SEC has revealed their much anticipated plan. Fortunately, they aren’t calling for money market funds to float their share prices -- for the moment. Money market mutual funds have been popular due to their perceived safety of principal. But many believed the SEC would allow the price of the funds to float, which industry observers say would have led to less than stable cash reserves and, possibly, a sinking money market industry.

A recent article in the Washington Post discusses the pros and cons of the SEC’s proposal. What do you think?