Bill Overview
Title: Consumer Financial Choice and Capital Markets Protection Act of 2022
Description: This bill allows a money market fund, under specified conditions, to elect to operate using a different method of valuation than is otherwise required. A money market fund that elects to do so shall not be subject to specified requirements related to the imposition of liquidity fees. (A money market fund is a type of mutual fund that invests in liquid, short-term assets.) Current law limits the provision of certain federal assistance directly to any money market fund. The bill requires disclosure of this limitation on federal assistance in a money market's advertising and sales literature.
Sponsors: Rep. Williams, Roger [R-TX-25]
Target Audience
Population: Investors and entities involved with money market funds globally
Estimated Size: 100000000
- The bill pertains to money market funds, which are a type of mutual fund investing in liquid, short-term assets.
- Retail investors who invest in money market funds will be directly affected as the bill changes how these funds can operate and disclose information.
- Institutional investors who utilize money market funds for short-term investments may also be impacted.
- There are 331 million U.S. citizens and a significant portion invest in mutual funds, including money market funds.
- According to the Investment Company Institute, 45% of U.S. households own mutual funds, and many of these may include money market funds in their portfolios.
Reasoning
- The target population includes retail and institutional investors in the US who are involved with money market funds.
- Not everyone in the US invests in money market funds, but those who do may notice changes in liquidity and valuation methods as allowed by the policy.
- Younger investors or those with small investments might not notice much of an effect, while larger institutional or knowledgeable investors might see more significant impacts.
- The policy budget needs to cover dissemination and educational efforts about the new policy, especially to those with high exposure to money market funds.
- Given the substantial number of Americans involved in mutual funds, the estimated number of directly impacted people is significant but varies depending on their level of investment engagement.
Simulated Interviews
Financial Analyst (New York, NY)
Age: 40 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- I understand the proposed changes, and they seem beneficial to avoid unnecessary liquidity fees.
- The disclosure requirements will help me make better investment choices.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Retired (Chicago, IL)
Age: 65 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 6/20
Statement of Opinion:
- I am slightly worried about how the new valuation laws might impact my investments.
- More transparency and less federal assistance is preferable to me.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Software Engineer (Austin, TX)
Age: 29 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 3.0 years
Commonness: 15/20
Statement of Opinion:
- I don't think the policy changes will affect me much due to my minimal investment.
- The policy seems to add transparency, which is good.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 7 |
University Professor (Miami, FL)
Age: 52 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 7.0 years
Commonness: 10/20
Statement of Opinion:
- I'm curious about the implications for fees with the new evaluation methods.
- I appreciate increased disclosures; it aids in better financial planning.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 6 |
Freelancer (San Francisco, CA)
Age: 37 | Gender: other
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 12/20
Statement of Opinion:
- I'm supportive of financial policy changes that enhance market fluidity.
- The impact on my portfolio seems neutral overall.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Entrepreneur (Los Angeles, CA)
Age: 50 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- Flexible valuation methods might help in market fluctuations.
- I'm keen on reduced dependence on federal backing.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Graphic Designer (Seattle, WA)
Age: 28 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 14/20
Statement of Opinion:
- The policy doesn't seem particularly relevant to me due to my minimal use of money market funds.
- Increased transparency is always a plus.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 7 |
Lawyer (Boston, MA)
Age: 48 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 9/20
Statement of Opinion:
- I always encourage transparency in financial markets.
- The ability to adjust valuation methods could benefit high-frequency traders.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Retired School Teacher (Phoenix, AZ)
Age: 63 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- Concerns about any changes impacting rates of returns
- Hopeful for more accountability with required disclosures.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 4 |
| Year 20 | 5 | 4 |
Real Estate Agent (Dallas, TX)
Age: 35 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 11/20
Statement of Opinion:
- It's good to see policy enhancing liquidity and transparency.
- Confidence in knowing fee structures won't abruptly change.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Cost Estimates
Year 1: $5000000 (Low: $4000000, High: $6000000)
Year 2: $5000000 (Low: $4000000, High: $6000000)
Year 3: $0 (Low: $0, High: $0)
Year 5: $0 (Low: $0, High: $0)
Year 10: $0 (Low: $0, High: $0)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- The extent to which funds shift to new valuation methods will determine true cost/savings.
- Investor education is crucial for acceptance and adjustment to the changes.
- Potential small-scale shifts in investment strategies might occur, influencing short-term market behaviors.