Regulators´ occurrences often represent the most dangerous quicksand

I fully agree with John Gapper when he finds not “unreasonable” the proposal by Mary Chapiro, the SEC Chairman, that money market funds would have to, “either become more like investments funds by allowing their net asset value to float, or more like banks by raising a buffer capital”, “Don´t leave the financial system on quicksand” August 30. 

That said, with respect of that “buffer capital” I hope he, and Ms Chapiro, mean one same capital requirement for any type of assets. This because since most investors are currently convinced their buck is already broken, or will be broken, their main interest is it becoming broken as little as possible. 

And, as we should know by now, nothing guarantees a super-large breakage of the buck more, than when besserwisser regulators, full of hubris, believe themselves to be the risk managers of the world, and start interfering by mean of risk-weights, with the markets´ own risk assessments. 

And, so, when regulating the money market funds (and the banks) please never forget that regulatory occurrences can also often represent the most dangerous quicksand.

The buck is being broken everywhere and investors know it.

Sir, Gillian Tett discusses the money market funds’ issue of “break the buck”, the return of less than 100 percent of investors’ cash, “The Achilles heel of America’s financial system”, July 31. 

The truth though is that the buck is being broken everywhere, especially if it is a real term buck, and investors have no other choice but to accept it … just look at Treasuries. 

And so clearly, the faster all explicit or implicit artificial guarantees are dismantled, the lesser distortions are produced, and the faster we might be able to return to some market sanity. 

But that would of course also requires the removal of all the regulatory distortions introduced in bank lending based on perceived risk, and which was and is the real cause of so much buck breaking going on.