Friday's New York Times features the article "Rethinking Money Market Funds". The piece discusses support actions taken by money fund advisors to date, saying, "During the last year, big banks and investment companies have committed more than $10 billion to shore up money market funds that were tainted by the mortgage mess." It says at least 17 companies "have moved to bolster funds" and adds, "Regulators say six or seven other investment firms have orchestrated bailouts that have not been made public."
The Times continues, "Money market funds have not experienced such turmoil since 1994 , when about 50 of them had to be rescued because of gyrations in interest rates." It cites disclosures, support actions and/or securities purchases by the following companies: Legg Mason, Credit Suisse, Bank of America, SunTrust, Morgan Stanley, Dresdner Bank, Janus, Lehman Brothers, Wachovia, U.S. Bancorp and TD Waterhouse, HSBC, Northern, SEI, and Wells Fargo.
The piece says, "Experts say fund investors are unlikely to lose money." It also cites the massive recent growth of money fund assets, saying, "The upshot is that assets of money funds have swollen to a record $3.5 trillion since the credit crisis began last year, according to Investment Company Institute data. That is an increase of $900 billion, or 35 percent."
Finally, the Times quotes: Alex Roever, "I think the damage has been done;" Bruce Bent, "Wall Street will respond by offering the next iteration of the questionable paper. If there is demand, we will come;" and Peter Crane, "There is still an awful lot of walking wounded investment money out there. Money funds should be a big beneficiary of that."
