79–006 

115TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 115–903 

CONSUMER FINANCIAL CHOICE AND CAPITAL MARKETS 

PROTECTION ACT OF 2017 

AUGUST 24, 2018.—Committed to the Committee of the Whole House on the State 

of the Union and ordered to be printed 

Mr. HENSARLING, from the Committee on Financial Services, 

submitted the following 

R E P O R T 

[To accompany H.R. 2319] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 2319) to protect the investment choices of investors in the 

United States, and for other purposes, having considered the same, 

report favorably thereon with an amendment and recommend that 

the bill as amended do pass. 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Consumer Financial Choice and Capital Markets 

Protection Act of 2018’’. 

SEC. 2. TREATMENT OF MONEY MARKET FUNDS UNDER THE INVESTMENT COMPANY ACT OF 

1940. 

The Investment Company Act of 1940 (15 U.S.C. 80a–1 et seq.) is amended by 

adding at the end the following: 

‘‘SEC. 66. MONEY MARKET FUNDS. 

‘‘(a) DEFINITIONS.—In this section— 

‘‘(1) the term ‘covered Federal assistance’ means Federal assistance used for 

the purpose of— 

‘‘(A) making any loan to, or purchasing any stock, equity interest, or debt 

obligation of, any money market fund; 

‘‘(B) guaranteeing any loan or debt issuance of any money market fund; 

or 

‘‘(C) entering into any assistance arrangement (including tax breaks), loss 

sharing, or profit sharing with any money market fund; and 

‘‘(2) the term ‘Federal assistance’ means— 

‘‘(A) insurance or guarantees by the Federal Deposit Insurance Corporation; 

‘‘(B) transactions involving the Secretary of the Treasury; or 


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‘‘(C) the use of any advances from any Federal Reserve credit facility or 

discount window, except to the extent any part of a program or facility with 

broad-based eligibility established in unusual or exigent circumstances 

might be made available. 

‘‘(b) ELECTION TO BE A STABLE VALUE MONEY MARKET FUND.— ‘‘(1) IN GENERAL.—Notwithstanding any other provision of this title, any openend investment company (or a separate series thereof) that is a money market 

fund that relies on section 270.2a–7 of title 17, Code of Federal Regulations, 

may, in the prospectus included in its registration statement filed under section 

8, state that the company or series has elected to compute the current price per 

share, for purposes of distribution or redemption and repurchase, of any redeemable security issued by the company or series by using the amortized cost 

method of valuation, or the penny-rounding method of pricing, regardless of 

whether its shareholders are limited to natural persons, if— 

‘‘(A) the company or series has as its objective the generation of income 

and preservation of capital through investment in short-term, high-quality 

debt securities; 

‘‘(B) the board of directors of the company or series elects, on behalf of 

the company or series, to maintain a stable net asset value per share or 

stable price per share, by using the amortized cost valuation method, as defined in section 270.2a–7(a) of title 17, Code of Federal Regulations (or successor regulation), or the penny-rounding pricing method, as defined in section 270.2a–7(a) of title 17, Code of Federal Regulations (or successor regulation), and the board of directors of the company has determined, in good 

faith, that— 

‘‘(i) it is in the best interests of the company or series, and its shareholders, to do so; and 

‘‘(ii) the money market fund will continue to use such method or 

methods only as long as the board of directors believes that the resulting share price fairly reflects the market-based net asset value per 

share of the company or series; and 

‘‘(C) the company or series will comply with such quality, maturity, diversification, liquidity, and other requirements, including related procedural 

and recordkeeping requirements, as the Commission, by rule or regulation 

or order, may prescribe or has prescribed as necessary or appropriate in the 

public interest or for the protection of investors to the extent that such requirements and provisions are not inconsistent with this section. 

‘‘(2) EXEMPTION FROM DEFAULT LIQUIDITY FEE REQUIREMENTS.— 

‘‘(A) ELECTIONS UNDER PARAGRAPH (1).—Notwithstanding section 270.2a– 

7 of title 17, Code of Federal Regulations (or successor regulation), no company or series that makes the election under paragraph (1) shall be subject 

to the default liquidity fee requirements of section 270.2a–7(c)(2)(ii) of title 

17, Code of Federal Regulations (or successor regulation) unless the board 

of directors of such company or series elects, in the prospectus included in 

the registration statement filed under section 8, to be subject to such requirements. 

‘‘(B) OTHER FUNDS.—Notwithstanding section 270.2a–7 of title 17, Code 

of Federal Regulations (or successor regulation), a company or series that 

does not make an election under paragraph (1) shall not be subject to the 

default liquidity fee requirements of section 270.2a–7(c)(2)(ii) of title 17, 

Code of Federal Regulations (or successor regulation), if it states in the prospectus included in the registration statement filed under section 8, that 

the company or series satisfies the provisions of subparagraphs (A) and (C) 

of paragraph (1) and that the board of directors of such company or series 

has elected for the company or series to not be subject to the default liquidity fee requirements. 

‘‘(c) PROHIBITION AGAINST FEDERAL GOVERNMENT BAILOUTS OF MONEY MARKET

FUNDS.—Notwithstanding any other provision of law (including regulations), covered Federal assistance may not be provided directly to any money market fund. 

‘‘(d) DISCLOSURE OF THE PROHIBITION AGAINST FEDERAL GOVERNMENT BAILOUTS

OF MONEY MARKET FUNDS.— 

‘‘(1) IN GENERAL.—No principal underwriter of a redeemable security issued 

by a money market fund nor any dealer shall offer or sell any such security to 

any person unless the prospectus of the money market fund and any advertising 

or sales literature for such fund prominently discloses, on the first page of such 

prospectus or literature, the prohibition against direct covered Federal assistance as described in subsection (c). 

‘‘(2) RULES, REGULATIONS, AND ORDERS.—The Commission may, after consultation with and taking into account the views of the Board of Governors of the 


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Federal Reserve System, the Federal Deposit Insurance Corporation, and the 

Department of the Treasury, adopt rules and regulations and issue orders consistent with the protection of investors, prescribing the manner in which the 

disclosure under this subsection shall be provided. 

‘‘(e) CONTINUING OBLIGATION TO MEET REQUIREMENTS OF THIS TITLE.—A company or series that makes an election under subsection (b)(1) shall remain subject 

to the provisions of this title and the rules and regulations of the Commission thereunder that would otherwise apply if those provisions do not conflict with the provisions of this section.’’. 

PURPOSE AND SUMMARY

On May 3, 2017, Representative Keith Rothfus introduced H.R. 

2319, the ‘‘Consumer Financial Choice and Capital Markets Protection Act’’. As modified by an amendment in the nature of a substitute, H.R. 2319 reverses portions of the U.S. Securities and Exchange Commission’s (SEC or Commission) 2014 rule on money 

market funds (MMFs). The legislation would allow MMFs, regardless of whether their investors are retail or institutional, to elect 

to use the stable Net Asset Value (NAV) approach instead of a 

floating NAV to calculate the price per share. Additionally, MMFs, 

either by making the election to use a stable NAV or through its 

board of directors, can choose not to be subject to the mandatory 

liquidity fee provision of the SEC’s 2014 rule. The bill does not, 

however, address the discretion afforded to boards of MMFs under 

the SEC rule that allows MMFs to implement gates to limit redemptions in times of stress. Additionally, the bill contains certain 

prohibitions against the use of taxpayer dollars to bail-out MMFs 

and requires disclosure of the bail-out prohibition provisions, but 

the bill does not restrict the Federal Reserve’s authority to implement a program or facility with broad-based eligibility established 

in unusual or exigent circumstances that may benefit MMFs. 

BACKGROUND AND NEED FOR LEGISLATION

The goal of H.R. 2319 is to address certain concerns raised by 

municipalities following the implementation of the 2014 SEC’s 

MMF rule, namely that certain municipalities might face increased 

funding costs through MMFs as a result of the rule and that prime 

and tax-exempt MMFs saw outflows of over $1 trillion into government MMFs after the rule’s adoption. 

MMFs were established first in the 1970s as a solution to the 

Federal Reserve’s Regulation Q, which prohibited bank demand deposits from paying interest and capped the interest rate on other 

types of bank accounts at 5.25 percent. Since then, investors have 

used MMFs as a type of mutual fund that offers higher yields than 

cash held in a bank deposit account while still allowing investors 

to quickly withdraw their funds. By law, MMFs are required to 

maintain generally low-risk investments, such as government securities, certificates of deposit, commercial paper, or other highly liquid and low-risk securities. MMFs are typically categorized by 

those that invest primarily in government securities, tax-exempt 

municipal securities, or corporate debt securities (known as prime 

funds), with some funds intended for retail investors and others intended for institutional investors. Money markets are securities. 

The FDIC does not federally insure these products, so they do not 

have to adhere to reserve requirements imposed on federally insured depository institutions, which allows MMFs to pay investors 


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higher yields. But the absence of deposit insurance can make 

MMFs vulnerable to panics and runs. 

Historically, MMFs attempted to keep their respective NAV at a 

constant $1.00 per share by utilizing the ‘‘amortized cost’’ method 

to value a portfolio of securities. Amortized cost is the book price 

of a security—i.e., the price a fund pays for a security, as adjusted 

over time for accounting changes in any discount or premium. In 

practice, maintaining a stable $1.00 NAV by utilizing this method 

can be difficult if a fund’s investments perform poorly, in which 

case the NAV per share may fall below $1.00—the occurrence of 

which is known as ‘‘breaking the buck.’’ 

In September 2008, the oldest MMF in the United States—the 

Reserve Primary Fund—‘‘broke the buck’’ due in large part to holding large amounts of Lehman Brothers’ commercial paper and was 

forced to suspend investor redemptions following Lehman Brothers’ 

bankruptcy filing. When this happened, investors in other MMFs 

became concerned about the safety of their investments and began 

to withdraw money from these funds, causing the other fund managers to liquidate assets to meet these redemption requests. No 

other MMFs ‘‘broke the buck’’ but some holding companies or ‘‘parents’’ of MMFs provided their funds with assistance to meet redemptions. To stem this run on MMFs, the U.S. Treasury Department announced that it would ‘‘guarantee the share price of any 

publicly offered eligible money market mutual fund.’’ Using the Exchange Stabilization Fund—an emergency reserve fund normally 

used for foreign exchange intervention—the Treasury provided an 

explicit government backstop to the $3 trillion MMF industry. 

In the aftermath of the crisis, the SEC adopted broad reforms in 

January 2010 to promote both the resilience and stability of MMFs 

in the SEC’s words ‘‘by tightening the maturity and credit quality 

standards and imposing new liquidity requirements’’. The 2010 

rules: 

• required MMFs to have a minimum percentage of their assets in highly liquid securities so that those assets can be readily converted to cash to pay redeeming shareholders; 

• placed new limits on a money market fund’s ability to acquire lower quality (Second Tier) securities; 

• shortened the average maturity limits for money market 

funds, which helps to limit the exposure of funds to certain 

risks such as sudden interest rate movements; 

• required funds to hold sufficiently liquid securities to meet 

foreseeable redemptions; 

• required fund managers to examine the fund’s ability to 

maintain a stable net asset value per share in the event of 

shocks—such as interest rate changes, higher redemptions, 

and changes in credit quality of the portfolio; 

• limited a money market fund’s investment in rated securities to those securities rated in the top two rating categories 

(or unrated securities of comparable quality); 

• required money market funds to perform an independent 

credit analysis of every security purchased. As such, the credit 

rating serves as a screen on credit quality, but can never be 

the sole factor in determining whether a security is appropriate for a money market fund; 


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• required money market funds each month to post on their 

Web sites their portfolio holdings; • required money market funds each month to report to the 

Commission detailed portfolio schedules in a format that can 

be used to create an interactive database through which the 

Commission can better oversee the activities of money market 

funds; • require money market funds and their administrators to 

be able to process purchases and redemptions electronically at 

a price other than $1.00 per share. This requirement facilitates 

share redemptions if a fund were to break the buck; • permit a money market fund’s board of directors to suspend redemptions if the fund is about to break the buck and 

decides to liquidate the fund; and • expanded the ability of affiliates of money market funds to 

purchase distressed assets from funds in order to protect a 

fund from losses. 

In addition, the 2010 rules improved the way that funds evaluate 

securities ratings provided by the Nationally Recognized Statistical 

Rating Organizations (NRSROs or credit rating agencies): • required funds to designate each year at least four 

NRSROs whose ratings the fund’s board considers to be reliable; • eliminated the current requirement that funds invest only 

in those asset backed securities that have been rated by an 

NRSRO; and • strengthened the requirements for allowing a money market fund to ‘‘look through’’ the repurchase issuer to the underlying collateral securities for diversification purposes. 

The Treasury Department proposed in its Financial Regulatory 

Reform: A New Foundation (2009), that the President’s Working 

Group on Financial Markets (PWG) prepare a report on fundamental changes needed to address systemic risk and to reduce the 

susceptibility of MMFs to runs. In October 2010, the President’s 

Working Group on Financial Markets issued a report on MMF reform in light of the Reserve Primary Fund’s collapse and its effect 

on the financial system. The President’s Working Group presented 

several policy options for further reforming MMFs, which included 

requiring MMFs to float their NAV. At the time, the former SEC 

Chairman noted that the 2010 rules were a ‘‘first step’’ to strengthen MMFs. On November 13, 2012, the Financial Stability Oversight Council (FSOC) voted unanimously to advance proposed recommendations for reform for public comment. Using its authority 

under Section 120 of the Dodd-Frank Act, the FSOC proposed several alternatives for structural reforms to address the risks posed 

by MMFs. The FSOC sought comment on the proposed recommendations for structural reforms of MMFs ‘‘that reduce the 

risk of runs and significant problems spreading through the financial system stemming from the practices and activities associated 

with MMFs.’’ 

Rather than allow the FSOC to dictate capital market standards, 

on July 23, 2014, the SEC approved a second package of rules governing money market funds. The 2014 rule requires institutional 

prime and institutional municipal MMFs to adopt market-based 

pricing by floating their NAV. Meanwhile, government and retail 


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MMFs are permitted to continue using the amortized cost method 

of seeking to maintain a stable share price. The SEC’s 2014 final 

rule also authorized the boards of MMFs to impose liquidity fees 

and redemption gates during periods of stress, and under certain 

circumstances, requires liquidity fees to be imposed. The SEC’s rule 

became effective on October 14, 2016. At the time of adoption, Robert Pozen, a senior fellow at the Brookings Institution, noted that 

‘‘the new rules are likely to reduce the chances of runs on money 

market funds in times of financial crisis. But it remains to be seen 

whether these tougher requirements will diminish the appeal of the 

funds relative to bank deposits for short-term investors.’’ 

Not everyone who was involved with the SEC’s final rule agreed 

that it would reduce the likelihood of runs on money market funds. 

Former Commissioner Michael Piwowar, when dissenting from the 

SEC rule, said: ‘‘While the floating NAV will not stop runs, it will 

impose costs on money market funds that will ultimately be borne 

by its shareholders in the form of higher fees and expenses, and 

lower returns.’’ 

However, then-SEC Commissioner Dan Gallagher supported the 

final rule and observed that the SEC cannot bail out any firm or 

product and that oversight of products should be focused on market-based valuations and capital standards. Former Commissioner 

Gallagher also said: 

[The floating NAV] eliminates the first-mover ‘put’ advantage that favors sophisticated institutional investors at the 

expense of retail investors, leaving the latter holding the 

proverbial bag. Just as importantly, in my view, today’s 

floating NAV reforms clarify for the investors the risks associated with investing in money market mutual funds 

while making it clear to the markets and to policymakers 

that these financial instruments are not bank products to 

be overseen by prudential regulators, but rather investment products properly regulated by the SEC. 

By setting October 14, 2016, as the date these new regulations 

would go into effect, the SEC provided MMFs two years to modify 

their business models and comply with the new rule. According to 

October 2017 statistics from the SEC’s Division of Investment Management, leading up to implementation of these reforms, prime and 

tax-exempt MMFs did experience a decrease in assets of $1 trillion, 

with government MMFs seeing an increase in assets of $968 billion 

during the same period. According to the SEC, during this period, 

some short-term rates increased, though these rate increases have 

since dissipated. The SEC anticipated this reallocation of assets 

from prime to government MMFs and potential effects on yields in 

the short-run in the rule’s 2014 adopting release but determined 

that the goals of the rulemaking justified the reforms, despite the 

costs. According to the SEC, since the MMF reforms were implemented, investor fund reallocations have not significantly changed, 

with assets in both government and prime MMFs largely stabilizing. The time period since the compliance date of the reforms has 

also coincided with a rising interest rate environment, with the 

Federal Reserve raising short-term interest rates several times 

over the last year, which has resulted in yield increases for MMFs. 


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On September 14, 2017, Capital Markets, Securities, and Investment Subcommittee Chairman Huizenga (R–MI) and Ranking 

Member Maloney (D–NY) sent a letter to SEC Chairman Jay Clayton asking for the SEC’s analysis of the impact of the 2014 money 

market reforms since they went into effect in October 2016, as well 

as the effects that would occur if the SEC were to reverse the rule 

requiring prime and municipal MMFs to float their NAVs. On October 5, 2017, Chairman Clayton responded that ‘‘[i]t is difficult at 

this time to predict what the impact on prime and municipal funds 

would be if the Commission were to permit them again to use a 

stable $1.00 NAV’’ and expressed concern ‘‘that making major 

changes at this time could be disruptive to the short-term funding 

markets.’’ Chairman Clayton also noted that ‘‘the Commission and 

its staff are monitoring the short-term funding markets and MMFs’ 

activities generally, and will remain focused on the role MMFs play 

for investors and the short-term markets.’’ At a hearing before the 

House Financial Services Committee on October 4, 2017, Rep. 

David Scott (D–GA) asked Chairman Clayton about his thoughts 

on the implemented MMF reforms, Chairman Clayton offered a 

similar response, saying: ‘‘Our Department of Economic Research is 

looking at it. And so I think—I think it’s too early to say we’re 

wrong.’’ In the U.S. Treasury Department’s Core Principles Report 

on asset management and insurance released on October 26, 2017, 

Treasury included a section that explained the SEC’s 2014 MMF 

reforms but the report did not make any policy recommendations. 

Nonetheless, proponents of the legislation believe that further 

delays to reverse portions of the 2014 MMF rules will continue to 

unduly impose costs on municipalities and will further affect the 

ability for prime funds to operate more efficiently for investors. At 

a November 3, 2017 Capital Markets subcommittee hearing, Patrick McCoy, President of the Government Finance Officers Association, testified that ‘‘[s]tate and local governments access the capital 

markets and issue short term debt for a variety of reasons. This 

important legislation would allow governments to continue this access without increasing costs for taxpayers.’’ Additionally, proponents assert that with other reforms the SEC has already implemented, investors can more accurately evaluate the risks that were 

overlooked leading up to the financial crisis of investing in MMFs. 

HEARINGS

The Committee on Financial Services held a hearing examining 

matters relating to H.R. 2319 on November 3, 2017. 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on 

January 17, 2018, and January 18, 2018, and ordered H.R. 2319 

to be reported favorably to the House as amended by a recorded 

vote of 34 yeas to 21 nays (recorded vote no. FC–145), a quorum 

being present. Before the motion to report was offered, the Committee adopted an amendment in the nature of a substitute offered 

by Mr. Rothfus by voice vote. 


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COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. The sole recorded 

vote was on a motion by Chairman Hensarling to report the bill favorably to the House as amended. The motion was agreed to by a 

recorded vote of 34 yeas to 21 nays (Record vote no. FC–145), a 

quorum being present. 


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COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the findings and recommendations of the Committee based on oversight activities under clause 2(b)(1) of rule X 

of the Rules of the House of Representatives, are incorporated in 

the descriptive portions of this report. 

PERFORMANCE GOALS AND OBJECTIVES

With respect to clause 3(c)(4) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that the bill contains no measure that authorizes funding, so no statement of general performance goals and objectives for which any measure authorizes funding is required. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATES

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, June 8, 2018. 

Hon. JEB HENSARLING, 

Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 2319, the Consumer Financial Choice and Capital Markets Protection Act of 2017. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Stephen Rabent. 

Sincerely, 

MARK P. HADLEY

(For Keith Hall, Director) 

Enclosure. 

H.R. 2319—Consumer Financial Choice and Capital Markets Protection Act of 2017 

Under current law, money market mutual funds are generally required to show the floating net asset value for their shares, that 

is, the share price must fluctuate with changes in the market value 

of the fund’s assets. Those funds also are required to round their 

share prices to the fourth decimal place and to impose liquidity fees 


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or suspend redemptions temporarily if the fund’s liquid assets falls 

below 10 percent of its total assets. 

H.R. 2319 would allow money market mutual funds to use alternate methods of valuation for their shares and to round those 

prices to the second decimal place. The bill also would remove the 

requirement for money market funds to impose liquidity fees. 

Using information from the Securities Exchange Commission 

(SEC), CBO estimates that implementing H.R. 2319 would cost $1 

million over the 2019–2023 period for the agency to update its 

rules and to monitor money market funds that use alternate valuation methods. However, the SEC is authorized to collect fees sufficient to offset its annual appropriation; therefore, assuming appropriation actions consistent with that authority, CBO estimates that 

the net effect on discretionary spending would be negligible. 

Enacting H.R. 2319 would not affect direct spending or revenues; 

therefore, pay-as-you-go procedures do not apply. 

CBO estimates that enacting H.R. 2319 would not increase net 

direct spending or on-budget deficits in any of the four consecutive 

10-year periods beginning in 2029. 

H.R. 2319 contains no intergovernmental mandates as defined in 

the Unfunded Mandates Reform Act (UMRA). 

The bill would impose a private-sector mandate on principal underwriters and dealers of securities issued by money market funds 

by requiring those entities to disclose that there is a prohibition 

against direct federal assistance for those money market funds. 

The disclosure would need to be included in the prospectus or literature of the security being sold. Using information from the SEC 

about the costs of complying with current disclosure requirements, 

CBO estimates that the incremental costs of the mandate would be 

small and would fall well below the annual threshold for privatesector mandates established in UMRA ($156 million in 2017, adjusted annually for inflation). 

The CBO staff contact for this estimate is Stephen Rabent. The 

estimate was reviewed by H. Samuel Papenfuss, Deputy Assistant 

Director for Budget Analysis. 

FEDERAL MANDATES STATEMENT

This information is provided in accordance with section 423 of 

the Unfunded Mandates Reform Act of 1995. 

The Committee has determined that the bill does not contain 

Federal mandates on the private sector. The Committee has determined that the bill does not impose a Federal intergovernmental 

mandate on State, local, or tribal governments. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of the section 102(b)(3) of the 

Congressional Accountability Act. 


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EARMARK IDENTIFICATION

With respect to clause 9 of rule XXI of the Rules of the House 

of Representatives, the Committee has carefully reviewed the provisions of the bill and states that the provisions of the bill do not 

contain any congressional earmarks, limited tax benefits, or limited 

tariff benefits within the meaning of the rule. 

DUPLICATION OF FEDERAL PROGRAMS

In compliance with clause 3(c)(5) of rule XIII of the Rules of the 

House of Representatives, the Committee states that no provision 

of the bill establishes or reauthorizes: (1) a program of the Federal 

Government known to be duplicative of another Federal program; 

(2) a program included in any report from the Government Accountability Office to Congress pursuant to section 21 of Public 

Law 111–139; or (3) a program related to a program identified in 

the most recent Catalog of Federal Domestic Assistance, published 

pursuant to the Federal Program Information Act (Pub. L. No. 95– 

220, as amended by Pub. L. No. 98–169). 

DISCLOSURE OF DIRECTED RULEMAKING

Pursuant to section 3(i) of H. Res. 5, (115th Congress), the following statement is made concerning directed rule makings: The 

Committee estimates that the bill requires no directed rule makings within the meaning of such section. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

This Section cites H.R. 2319 as the ‘‘Consumer Financial Choice 

and Capital Markets Protection Act’’ 

Section 2. Treatment of money market funds under the Investment 

Company Act of 1940 

This section amends the Investment Company Act of 1940 to 

allow MMFs to elect to use the stable NAV approach to calculate 

price per share. Additionally those MMFs that do elect to use the 

stable NAV approach are exempted from the mandatory liquidity 

fee provision of the 2014 SEC rule so long as they comply with certain requirements. This section also provides certain prohibitions 

against the use of taxpayer funds to bail out MMFs. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

and existing law in which no change is proposed is shown in 

roman): 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (new matter is printed in italic): 


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INVESTMENT COMPANY ACT OF 1940 

* * * * * * * 

SEC. 66. MONEY MARKET FUNDS. 

(a) DEFINITIONS.—In this section— 

(1) the term ‘‘covered Federal assistance’’ means Federal assistance used for the purpose of— 

(A) making any loan to, or purchasing any stock, equity 

interest, or debt obligation of, any money market fund; 

(B) guaranteeing any loan or debt issuance of any money 

market fund; or 

(C) entering into any assistance arrangement (including 

tax breaks), loss sharing, or profit sharing with any money 

market fund; and 

(2) the term ‘‘Federal assistance’’ means— 

(A) insurance or guarantees by the Federal Deposit Insurance Corporation; 

(B) transactions involving the Secretary of the Treasury; 

or 

(C) the use of any advances from any Federal Reserve 

credit facility or discount window, except to the extent any 

part of a program or facility with broad-based eligibility established in unusual or exigent circumstances might be 

made available. 

(b) ELECTION TO BE A STABLE VALUE MONEY MARKET FUND.— 

(1) IN GENERAL.—Notwithstanding any other provision of this 

title, any open-end investment company (or a separate series 

thereof) that is a money market fund that relies on section 

270.2a–7 of title 17, Code of Federal Regulations, may, in the 

prospectus included in its registration statement filed under 

section 8, state that the company or series has elected to compute the current price per share, for purposes of distribution or 

redemption and repurchase, of any redeemable security issued 

by the company or series by using the amortized cost method of 

valuation, or the penny-rounding method of pricing, regardless 

of whether its shareholders are limited to natural persons, if— 

(A) the company or series has as its objective the generation of income and preservation of capital through investment in short-term, high-quality debt securities; 

(B) the board of directors of the company or series elects, 

on behalf of the company or series, to maintain a stable net 

asset value per share or stable price per share, by using the 

amortized cost valuation method, as defined in section 

270.2a–7(a) of title 17, Code of Federal Regulations (or successor regulation), or the penny-rounding pricing method, 

as defined in section 270.2a–7(a) of title 17, Code of Federal Regulations (or successor regulation), and the board of 

directors of the company has determined, in good faith, 

that— 

(i) it is in the best interests of the company or series, 

and its shareholders, to do so; and 

(ii) the money market fund will continue to use such 

method or methods only as long as the board of directors believes that the resulting share price fairly reVerDate Sep 11 2014 03:58 Aug 25, 2018 Jkt 079006 PO 00000 Frm 00013 Fmt 6659 Sfmt 6603 E:\HR\OC\HR903.XXX HR903

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14 

flects the market-based net asset value per share of the 

company or series; and 

(C) the company or series will comply with such quality, 

maturity, diversification, liquidity, and other requirements, 

including related procedural and recordkeeping requirements, as the Commission, by rule or regulation or order, 

may prescribe or has prescribed as necessary or appropriate 

in the public interest or for the protection of investors to the 

extent that such requirements and provisions are not inconsistent with this section. 

(2) EXEMPTION FROM DEFAULT LIQUIDITY FEE REQUIREMENTS.— 

(A) ELECTIONS UNDER PARAGRAPH (1).—Notwithstanding 

section 270.2a–7 of title 17, Code of Federal Regulations (or 

successor regulation), no company or series that makes the 

election under paragraph (1) shall be subject to the default 

liquidity fee requirements of section 270.2a–7(c)(2)(ii) of 

title 17, Code of Federal Regulations (or successor regulation) unless the board of directors of such company or series 

elects, in the prospectus included in the registration statement filed under section 8, to be subject to such requirements. 

(B) OTHER FUNDS.—Notwithstanding section 270.2a–7 of 

title 17, Code of Federal Regulations (or successor regulation), a company or series that does not make an election 

under paragraph (1) shall not be subject to the default liquidity fee requirements of section 270.2a–7(c)(2)(ii) of title 

17, Code of Federal Regulations (or successor regulation), if 

it states in the prospectus included in the registration statement filed under section 8, that the company or series satisfies the provisions of subparagraphs (A) and (C) of paragraph (1) and that the board of directors of such company 

or series has elected for the company or series to not be subject to the default liquidity fee requirements. 

(c) PROHIBITION AGAINST FEDERAL GOVERNMENT BAILOUTS OF

MONEY MARKET FUNDS.—Notwithstanding any other provision of 

law (including regulations), covered Federal assistance may not be 

provided directly to any money market fund. 

(d) DISCLOSURE OF THE PROHIBITION AGAINST FEDERAL GOVERNMENT BAILOUTS OF MONEY MARKET FUNDS.— 

(1) IN GENERAL.—No principal underwriter of a redeemable 

security issued by a money market fund nor any dealer shall 

offer or sell any such security to any person unless the prospectus of the money market fund and any advertising or sales 

literature for such fund prominently discloses, on the first page 

of such prospectus or literature, the prohibition against direct 

covered Federal assistance as described in subsection (c). 

(2) RULES, REGULATIONS, AND ORDERS.—The Commission 

may, after consultation with and taking into account the views 

of the Board of Governors of the Federal Reserve System, the 

Federal Deposit Insurance Corporation, and the Department of 

the Treasury, adopt rules and regulations and issue orders consistent with the protection of investors, prescribing the manner 

in which the disclosure under this subsection shall be provided. 


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15 

(e) CONTINUING OBLIGATION TO MEET REQUIREMENTS OF THIS

TITLE.—A company or series that makes an election under subsection (b)(1) shall remain subject to the provisions of this title and 

the rules and regulations of the Commission thereunder that would 

otherwise apply if those provisions do not conflict with the provisions of this section. 

Æ 


SSpencer on DSKBBXCHB2PROD with REPORTS