RealClearMarkets - Having Wrecked the Banks, the Feds Target Money Funds: "All of which brings us to the SEC's proposed regulatory plan that would require companies in the money market space to set aside holdings so that they're ready and able to handle redemptions should another financial crisis occur. Translated, having bailed the money market sector out in 2008, the federal government now seeks to weaken it on the way to market irrelevance.
As it is, money market firms continue to suffer wildly distorted rates of interest on short-term credit that make the provision of any kind of yield for customers difficult to achieve. Basically the government that wrecked money market returns through its naïve policies of near zero rates now wants to make it even more difficult for them to achieve any kind of yield on the funds invested with them."
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