Big Dirty Money

A blog on business law, politics, and white collar crime

September 17, 2014

Post-Lehman: Is Money Market Fund Reform Still Too Weak?

Think the kind of run on Lehman Brothers that kicked off a financial panic six years ago is a thing of the past? Now that the S.E.C. issued its final rule in July, is money market fund reform complete?

Having tackled the persistence of repo run risk in an earlier N.Y. Times DealBook guest column, here’s a take on money market fund reform. Today’s piece revisits the role of money market funds in Lehman’s collapse and contagion. It also highlights a new proposal by University of Pennsylvania Law School Professor Jill E. Fisch — that sponsors of funds with fixed net asset values be required to guarantee the NAV — in other words to “back the buck.” Click here to read.

In the wake of the financial meltdown in 2008, there were many who claimed it had been inevitable, that “no one saw it coming,” and that subprime borrowers were to blame.