Mercury Rising 鳯女

Politics, life, and other things that matter

Your money market fund? Not safe either.

Posted by Charles II on September 16, 2008

Batten the hatches.

Christopher Condon, Bloomberg (hat tip, Johnny Wendell):

Reserve Primary Fund became the first money-market fund in 14 years to expose investors to losses after writing off $785 million of debt issued by bankrupt Lehman Brothers Holdings Inc.

The fund, whose assets plunged more than 60 percent to $23 billion in the past two days, said the Lehman losses forced the net value of its assets below $1 a share, known as breaking the buck. Reserve Primary, the oldest money fund in the nation, fell to 97 cents a share and redemptions were suspended for as long as seven days….

“This is uncharted territory,” said Peter Crane, president of Crane Data LLC in Westborough, Massachusetts, which tracks money-market funds.

Now, Reserve is a small significant player. But it’s disconcerting to read this:

Boston-based Evergreen Investment Management Co. said yesterday it had secured support from Wachovia Corp., its parent, to protect three money-market funds from losses linked to debt issued by Lehman.

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