Michigan has a Wall Street problem.
We’ve seen this before, whether it was during the 2008 financial crisis that saw so many Michiganians hurt by Wall Street’s greed, or the terrible pain caused by creditors involved in Detroit’s bankruptcy. Unfortunately, they’re at it again, and this time they’re hurting our ability to improve our roads and infrastructure, build new hospitals and schools, and provide the everyday services taxpayers deserve and expect.
As county treasurers, our focus every day is to work for the taxpayers we serve. That means being prudent with your money, investing in our local economies, and making our voices heard when it can make a difference in the lives of our families, neighbors and communities. That’s why we’re speaking out now — because major Wall Street firms are making another money grab on the backs of Michigan’s citizens, using their lobbying dollars and Washington influence to try and rig the system in their favor.
At issue is a 2016 Securities and Exchange Commission rule dealing with money market funds. The rule was a boon to a handful of major Wall Street investment houses eager to avoid more regulation, but has had significant real-world consequences for state and local governments. That’s because states, municipalities, businesses and even colleges and universities need to be able to access low-cost private sector financing. This financing helps pay for new roads and infrastructure, economic development, and other projects citizens benefit from every day.
Money market funds have historically been the largest purchasers of short-term debt used as working capital and infrastructure investment by municipalities and businesses. They invest in bonds that finance the maintenance and construction of schools, hospitals, roads and bridges, utilities, affordable housing, and other critical infrastructure that Michigan’s economy depends on for growth.
Unfortunately, that SEC rule has essentially dried up the market for exactly the type of debt states, municipalities and businesses are likely to issue. With no ready investors, and interest rates at the Fed on the rise, the result has been catastrophic — investors have shifted $1.2 trillion out of these funds that invest in state and local debt.
The result: these Wall Street giveaways are working to drive up borrowing costs, which are in turn passed on to Michigan’s citizens through reduced services and less investment in projects that generate jobs and economic opportunity.
Fortunately, there is a bipartisan effort being made in Congress that would reverse the SEC rule and make a real difference for Michigan’s local governments and businesses. The Consumer Financial Choice and Capital Markets Protection Act is cosponsored by Sen. Gary Peters and U.S. Reps. David Trott, R-Birmingham, Dan Kildee, D-Flint, and John Moolenaar, R-Midland. Reversing the rule would allow investments to flow back towards municipal governments and local businesses, significantly increasing the financing available to build job-creating infrastructure and economic development priorities in our state.
With that in mind we are calling on all members of Michigan’s congressional delegation to support this crucial piece of bipartisan, common-sense legislation. We also urge all Michigan residents to contact their representatives in Washington and let them know that they’re in Washington to serve Michigan’s Main Streets, not do the bidding of Wall Street investment houses that are aggressively lobbying to keep their cash cow in place.
State and local governments, and the citizens they stand for, have in recent years taken the brunt of Washington policy decisions that only seem to benefit the largest and most politically-connected Wall Street firms. Reversing the SEC’s money fund rule is one thing Congress can do to benefit our local communities and job creators in Michigan and throughout the country. We call on all of our elected leaders in Congress to make this a top priority in 2018.
Mary Balkema is Kalamazoo County treasurer and Andy Meisner is Oakland County treasurer.