In conference calls, congressional testimony and speeches, he has offered a narrative of the role money funds played in the 2008 crisis that differs from the one conveyed by regulators. The exodus the funds experienced was the result, not the cause, of the broader meltdown, he said.
Lobbying Effort
The run on money funds was the only one in the industry's 40-year history, according to Donahue. Shoring them up didn't cost the federal government any money, and the 2010 changes made the funds resilient enough to handle the stresses they are likely to face, he said.
Donahue's conclusion -- that the SEC's ideas threaten the survival of the money-fund business -- has won support from other mutual-fund firms. Fidelity Investments, in a March letter to the SEC, said the proposed reforms "will ultimately destroy the money-market fund industry."
The 10 biggest money-fund managers and the Investment Company Institute, a Washington-based trade group, reported combined lobbying spending of $16 million in the first half of 2012 in disclosures that reference money funds, according to a review of documents by Bloomberg News. That compares with $16.7 million in all of 2010. Federated pitched in $230,000.
Wooing Treasurers
Donahue has wooed corporate treasurers and state officials, two constituencies that issue securities purchased by money funds.
"I will speak to anyone who will listen," he said in the interview. He has also found friends in Congress, including Pennsylvania Republican Senator Patrick Toomey. Toomey, at the June hearing, defended money funds with some of the same language Donahue has employed.
Winning allies hasn't been difficult because money funds are popular, according to Donahue.
"There is still $2.6 trillion in these funds even though there is no yield," he said. "People love them." Money funds yielded an average of 0.06 percent as of Aug. 15, according to Crane Data.