September 18, 2013
1. Experience shows that by-far MOST institutions offering/holding client's retirement accounts (401K and IRA) ONLY offer holding of cash in money market funds. In times of financial crisis (Great Recession Euro etc) owners of retirement accounts liquidate their stock and bond holdings moving into cash. However, the cash is automatically swept INTO money market accounts at such times, with most institutions offering NO alternatives. A minority of RARE exceptions offer FDIC accounts for cash holdings.
2. Thus in times of maximum financial crisis, the solvency of Vital retirement accounts depends almost totally on the solvency and NAV integrity of money market accounts. This elevates the NATIONAL IMPORTANCE of protecting the solvency and NAV of retirement account money market funds.
3. Also in times of crisis, the retiree becomes the "Last Account Holder" since the retiree is practically speaking unable to withdraw cash from the sheltered 401K/IRA account, while all others are able to do so.
4. The proposals do not go far enough to protect retiree's money market accounts. Recommend: add to the proposals, the segregation of tax-sheltered 401K/IRA accounts, there will be virtually no large withdrawals in crisis, and this combined with the proposals will preserve equity-NAV.