Senate Banking Committee members sparred Thursday over a proposal to bar the Securities and Exchange Commission from imposing a variable price (called a floating net asset value) on any money market mutual fund.

Currently, all money market funds have a constant net asset value of $1. But as of October 14, institutional prime and institutional municipal money market funds will have to adopt to a floating NAV.

At the end of last year, money market funds were estimated to have $245 billion in municipal debt.

A co-sponsor of a bill to create a ban, New Jersey Democratic Senator Robert Menendez said local government officials are complaining the floating NAV will increase their borrowing costs while investors and fund managers worry it will significantly reduce the viability of money market funds as tools to invest money short term.

Noting that upheaval in the money fund market helped precipitate the financial crisis, Virginia Democratic Senator Mark Warner said removing the SEC’s ability to require floating NAVs on the industry would restore a false sense of security the investments are risk-free.

He said the bill has little chance of passage.

In defense of the legislation, Pennsylvania Republican Senator Pat Toomey noted after the Reserve Primary Fund “broke the buck” when its underlying shares fell below $1 in value, investors received 99 cents on the dollar.

In arguing against the ban, Better Markets Securities Specialist Steve Hall said retail investors are at risk from the products because they do not come with any form of reliable capital buffer or government insurance that can mitigate the effect of a run.

He added a floating NAV reduces the chance of a run because it eliminates the incentive of investors to try to be the first to cash out in hopes of obtaining the $1 share price before it could be lowered in panic withdrawals.