Feature

Avoiding the next bailout

The SEC will vote soon on new rules that would reduce taxpayers’ exposure to the $2.6 trillion currently invested in money market funds.

Gretchen MorgensonThe New York Times

Aug. 29 could be the day we “end up on the hook for a big future bailout,” said Gretchen Morgenson. That’s when the Securities and Exchange Commission will vote on new rules that would reduce taxpayers’ exposure to the $2.6 trillion currently invested in money market funds. The industry is fighting the effort tooth and nail, while conveniently forgetting the government help it received in 2008 and ignoring the funds’ continued vulnerability to the next financial crisis. During the crash, the Treasury provided $50 billion to prevent money market funds from “breaking the buck,” or falling below their sacrosanct $1 share price in the event of a run by panicking investors. To reduce the chance that the government will have to ride to the rescue again, the SEC wants funds to set aside enough money to withstand future runs. The funds insist that’s not necessary, even though recently released Treasury documents suggest that several were closer to breaking the buck in 2008 than was previously disclosed. It’s true that the sector escaped the crash relatively unscathed. But that’s not reason enough to leave taxpayers exposed “when the next financial crisis comes—and it will.” 

Recommended

Expert predicts 'very hard' period between U.S., France following Australian deal
Payne, Blinken, and Austin.
rough patch

Expert predicts 'very hard' period between U.S., France following Australian deal

Biden at his best and worst
President Biden.
Picture of Damon LinkerDamon Linker

Biden at his best and worst

Putin reveals the Kremlin is awash in COVID-19 cases
Vladimir Putin
'not one or two'

Putin reveals the Kremlin is awash in COVID-19 cases

France says it killed ISIS Africa leader in 'decisive blow against this terrorist group'
France announces ISIS death
ISIS

France says it killed ISIS Africa leader in 'decisive blow against this terrorist group'

Most Popular

Did Theranos Lose Afghanistan?
Elizabeth Holmes and James Mattis.
Samuel Goldman

Did Theranos Lose Afghanistan?

How Newsom ran away with the recall
Gavin Newsom.
Picture of David FarisDavid Faris

How Newsom ran away with the recall

Why Laurence Fishburne isn't in the Matrix trailer
The Matrix Resurrections
rabbit hole

Why Laurence Fishburne isn't in the Matrix trailer