January 28, 2013 - There’s some good news on the regulatory front for the little investor. First up: Looks like the biggest players in the money market industry are backing down a bit from their ferocious opposition to proposed Securities and Exchange Commission rules designed to protect investors, Bloomberg News reports.
Federal Reserve Chairman Ben Bernanke said today that “a new issue this year pertains to reference interest rates, which recent investigations have demonstrated were manipulated, particularly in the case of Libor.”
Credit Suisse Group AG, Bank of America Corp. and JPMorgan Chase & Co. lead borrowers tapping the largest prime money-market funds through repurchase agreements that finance about $20 billion of securitized debt, according to Fitch Ratings.
Investors in Europe risk losing a haven as Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley break a taboo that’s stopped 88 billion euros ($113 billion) of money-market funds from ever losing principal.
More than half of Europe’s money market funds by assets have closed because securities they invest in pay negative returns after the European Central Bank cut interest rates, according to Standard & Poor’s.
The six largest U.S. money market funds have eliminated their lending to Italian and Spanish banks, reduced investments in French banks and are favoring Swiss securities for their $511 billion of assets.