August 2006 Weddings
Dear Community,
Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Fed to insure troubled money market funds
Aren't money markets considered to be "cash like" instruments -- i.e. should be extremely safe?
:: Burying head in sand like ostrich at more bad financial news I don't understand. ::
Treasury moves to calm money-market investors
LONDON (MarketWatch) -- The U.S. Treasury said Friday it will guarantee money-market funds so that no other fund "breaks the buck," a move designed to staunch hundreds of billions of dollars from bleeding out of the industry.
Specifically, the Treasury Department said it's going to insure any publicly offered money-market fund, both retail and institutional, that pays a fee.
Under the plan, the Federal Reserve will buy agency discount notes from primary dealers, acting as a backstop when and if money-market funds want to sell their assets.
President Bush has authorized up to $50 billion in protection, and Treasury said it's acting using the authority of the Exchange Stabilization Fund.
"Concerns about the net asset value of money-market funds falling below $1 have exacerbated global financial-market turmoil and caused severe liquidity strains in world markets," said Treasury.
It wasn't immediately clear how much mutual-fund companies will have to pay to participate in the plan. As of 10.30 a.m. Eastern time, several firms said they were still digesting Treasury's announcement, and had no further details about how the plan would work.
In a related move, the Fed said it will extend loans at the primary credit rate to finance the purchase of asset-backed commercial paper from money-market funds. Such a move should assist money funds that hold such paper in meeting demands for redemptions, the U.S. central bank said.
The moves came as fears grew during the week that the $3.5 trillion money-market fund industry was seeing a run on assets. Nearly $90 billion of net investor cash pulled out Wednesday, among the largest single-day drops in history, according to iMoneyNet.
Early Friday figures compiled by RBC Capital Markets showed that $160 billion got pulled out Thursday.
The crisis was triggered by Primary Fund (RFIXX RFIXX) , the first money-market fund launched in 1971 by industry pioneer The Reserve. Primary fund's net asset value, or NAV, fell Tuesday to 97 cents a share -- effectively "breaking the buck." Money-market funds typically maintain a NAV of $1 a share.
The $64 billion fund held $785 million of commercial paper issued by Lehman Brothers Holdings (LEHMQ LEHMQ) , helping set off selling the dropped Primary fund's assets to about $26 billion in less than 48 hours.
As of Wednesday's close, two other Reserve funds had broken the buck: Yield Plus Fund (RYPQX RYPQX) was also at 97 cents a share, while International Liquidity Fund, available only to offshore investors, dropped to 91 cents a share. The Reserve said Thursday it was freezing its assets.
The Reserve's troubles panicked the money-market industry. Putnam Investments, a subsidiary of Great West Lifeco Inc. (CA:GWO) , said Thursday that it was liquidating its $12.3 billion Prime Money Market Fund due to "significant redemption pressure."
Legg Mason Inc. also faced such pressure on Thursday.
It was forced into support agreements for extra cash to ensure that two funds -- Liquid Reserves Portfolio (CILXX CILXX) and Western Asset Institutional Money Market Fund (INMXX INMXX) -- kept their $1-a-share NAVs, and acquired two letters of credit to make sure another fund, Citi Institutional Liquidity Fund, kept its AAA rating. The latter is only available to offshore investors.
The Treasury move comes as part of a package of government efforts, including a program being designed to buy up bad assets from financial institutions and a temporary ban on short sales in nearly 800 financial stocks instituted by the Securities and Exchange Commission.
Steve Goldstein is MarketWatch's London bureau chief.
Re: Fed to insure troubled money market funds
It is rare for money market funds to go under, but the significant pressure that the markets faced this week led to the meltdown of Primary Fund. Basically, everyone tried to cash out all of their money at the same time and the fund couldn't return cash in full.
The fund experienced massive losses b/c it invested in Lehman debt. There was actually a time not too long ago that Lehman was a secure company, hence the reason why a money market fund like Primary would invest in debt issued by a Lehman in the first place.