As a result, he supports the S.E.C.'s idea of requiring that funds maintain a capital cushion.
The exchange has limited ability to dip into cash reserves to pay for purchases, however, as it is required to maintain a capital buffer to cover the risks involved with running a clearinghouse.
According to Mr. Sanchez, the risk that the parent company's problems will infect the Mexican unit are somewhat limited because of Mexico's banking regulations, which require banks to maintain a capital ratio of at least 8 percent.
The proposed changes include requiring money market funds to use floating net asset values to report their performance, rather than the fixed $1 a share that they use now, or to require the funds to maintain a capital buffer to stabilize their values.
We keep a high level of liquidity and maintain a capital structure that, hopefully, will ensure we are well placed to deal with any market eventuality including taking advantage of opportunities that might present themselves in a market downturn.
"Since agreements reached in early 2004, OFHEO has had an ongoing requirement on each enterprise to maintain a capital level at least 30% above the statutory minimum capital requirement, because of the financial and operational uncertainties associated with their past problems," writes OFHEO Director James B. Lockhart in a statement.
Nonetheless, only those insurers that maintain a capital adequacy ratio of 10% or above are entitled to take advantage of the new legislation, and even then they have to seek the insurance authority's approval before making any investment in bank deposits, commercial bills, bonds, money market funds and stocks.
Obama's Treasury Department has refused to allow Fannie and Freddie to maintain a capital base as their profits decline.
Maintaining a capital punishment system in California also sends the message that the death penalty is within the social and moral norms of this country.
The Mortgage Bankers Association in particular is beginning to worry that taxpayers will have to pick up the tab in the event of another housing bust, since Fannie and Freddie aren't being allowed to maintain a capital cushion.
