Will the SEC's 2010 Reforms Prevent Another $2.7 Trillion Bailout of Money Funds?
University of Louisiana at Lafayette - College of Business Administration
December 31, 2012
This is the only study of the $2.7 trillion taxpayer guarantee of money market mutual funds during the 2008 financial crisis. Funds that were in 2008 adhering to the increased liquidity requirements for money funds imposed by the Securities and Exchange Commission (SEC) in 2010, were generally no less likely to get taxpayer or sponsor bailouts during the financial crisis. Yet, funds with lower asset maturities were significantly less likely to need federal or sponsor assistance. Fund shares that benefited from Federal Reserve’s asset-backed commercial paper program were significantly more likely to get bailed out by taxpayers and sponsors.
Number of Pages in PDF File: 42
Keywords: breaking the buck, bailout, Dodd-Frank, DLA, exchange rate stabilization fund, Financial Stability Oversight Council (FSOC), guarantees, liquidity, money market mutual funds, Primary Reserve Fund, regulation, SEC, Securities and Exchange Commission, U.S. Treasury, WAL, WAM, WLA
JEL Classification: G01, G18, G22, G23, G28, H12, H81, L5
Date posted: January 2, 2013
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