money market mutual funds

Banking Regulatory Agencies Finalize Rules on Real Estate Appraisals and Regulatory Treatment of Emergency Capital Facilities

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On September 29, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (Federal Reserve) and the Federal Deposit Insurance Corporation (FDIC), together with the OCC and the Federal Reserve (the “Agencies”), published final rules temporarily deferring real estate appraisal requirements for financial institutions and mitigating the regulatory capital and liquidity effects for banks that participate in certain COVID-related Federal Reserve liquidity facilities. The final rules are identical or substantially similar to interim final rules currently in effect that were issued earlier this year. The final rule on real estate appraisals temporarily allows financial institutions to defer completion of appraisals and evaluations on certain residential and commercial real estate transactions for up to 120 days after closing. The final rule on the Federal Reserve liquidity facilities provides that banking organizations that participate in the Federal Reserve’s Money Market Mutual Fund Liquidity Facility and Paycheck Protection Program Liquidity Facility are permitted to exclude exposures acquired through their participation in such programs when determining their compliance with the Agencies’ regulatory capital rule and/or liquidity coverage ratio rule. OCC Release. Federal Reserve Release. FDIC Release. 

SEC Proposed Rule on Money Market Reform

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On June 5, the SEC proposed two alternatives for amending rules that govern money market mutual funds under the ’40 Act.  The alternatives would (i) require money market funds to sell and redeem shares based on the current market-based value of the securities in their underlying portfolios (transact at a floating NAV) or (ii) require money market funds to impose a liquidity fee if the fund’s liquidity levels fell below a certain threshold and permit the fund to temporarily suspend redemptions under that scenario.  Comments on the proposed rule must be submitted within 90 days of publication in the Federal Register.   SEC Release.  SEC Proposed Rule.

Proposed Delay of FAS 167 for Investment Funds

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On December 4, FASB issued an exposure draft that proposes to delay the effective date of FAS 167 for some funds (possibly including mutual funds, hedge funds, private equity funds, and venture capital funds) until late 2010 when the joint IASB/FASB consolidation project is completed. Securitization entities, asset-backed financing entities, or entities which were qualifying special purpose entities (QSPEs) are not affected by the proposal. FASB also similarly deferred the effective date of FAS 167 for money market mutual funds that must comply with Rule 2a-7 of the Investment Act. Comments are requested by January 6, 2010. FASB Exposure Draft. FASB Summary.