Yesterday, Treasury Secretary Timothy Geithner briefly discussed money market funds during his testimony at a Senate Banking Committee hearing. He stated that U.S. financial institutions, including major banks and money market funds, have substantially reduced their exposure to the economies of Europe that are under the most pressure. In response to a question from Senator Jack Reed (D-RI), Secretary Geithner stated that the reliance on short term funding in the U.S. has fallen dramatically and money market funds have moved to a "more conservative regime." Secretary Geithner also lauded the efforts by the SEC and the Fed to construct a plan to improve the basic resiliency of money market funds, saying that they are sharing their judgments in advance with Treasury and that they seem to be on the right track.
