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Saturday'​s Wall Street Journal writes "​Muni Money-​Fund Yields Surge", which says, "Municipal money-​market yields are soaring as investors flee tax-​exempt debt in a rush to safety across the credit markets. Many of these tax-​free funds are now topping 5% in seven-​day yields. The $​3.​4 billion USAA Tax Exempt Money Market Fund is yielding 5.​26%, up from 1.​89% at the end of August, according to Crane Data LLC. The $​24 billion Fidelity Municipal [​Money] Market Fund is yielding 5.​21%, up from 1.​62% in August." Also, see yesterday'​s video of Federated'​s Deborah Cunningham on Bloomberg TV. Cunningham talks "​about investor sentiment on money-​market funds, the integration of Putnam Investments LLC'​s Putnam Prime Money Market Fund into Federated, and fund investment strategy." Finally, see Bloomberg'​s "​Jittery Money-​Market Investors Await Treasury Guarantee Details".

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"​Money-​Market Funds: Now a Safer Haven" writes Kiplinger.​com and featured on WashingtonPost.​com. The piece says, "Money-​fund shareholders, mainly institutions, became concerned about potential losses and withdrew slightly more than $​133 billion from Reserve Primary and other funds between September 16 and September 19. Regulators worried that this could turn into a Depression-​style run on the funds. That might have led to a '​full-​scale meltdown,' says Peter Crane, president of Crane Data, which tracks money funds. To prevent a run ... the Treasury Department announced it would create a temporary insurance system for money funds.... The insurance, which covers assets in money funds as of September 19, will last for a year and will be available to both taxable and tax-​free money-​market funds that pay the required fee. The fee hasn'​t been set yet, but it will be based on a fund'​s assets." See also, "Boston Fed leads loan plan to ease money market fund woes."

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"Pick Money Funds That Don'​t Need Insuring" says Bloomberg'​s Jane Bryant Quinn in her latest column. "Most of the large money funds that cater to individuals already insure you against loss, using their own resources. Now they'​ll have to decide whether they want to pay for a layer of government protection, too. If they do, they could either absorb that extra cost or pass it along to investors in the form of slightly reduced returns." Sh adds, "What saved these funds is that they'​re sponsored by large, diversified financial services companies, says Peter Crane, publisher of Money Fund Intelligence, which covers the industry. The sponsors bought the bad paper out of their funds, making investors whole. Maintaining their money funds at $​1 a share isn'​t optional." In other news, see "Ameriprise Financial Supports Clients Holding Investments in The Reserve'​s Primary Fund."

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Associated Press writes, "​Investors return -- cautiously -- to money funds", which says, "Investors are cautiously returning to battered money-​market mutual funds after the government intervened to stem a massive pullout by professional money managers. The run on the funds had threatened to expose individual investors to losses that, while just pennies on the dollar, would have been unprecedented for the normally safe investments." It quotes Peter Crane, "The moves by Treasury Department and Federal Reserve have eased the pressure on the funds tremendously, and raised the odds that we won'​t see another fund '​break the buck'." See also Reuters' story "​Money-​market fund assets up $​1.​5 bln Monday - Crane", Reuters' "​Panic subsides in money-​market funds", Bloomberg'​s "​Money-​Market Funds Still Good for Liquidity, Risk, Advisers Say", and WSJ'​s "​Fund That Broke the Buck Didn'​t Follow Its Own Advice".

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Bloomberg TV "​Crane Says Reserve Primary Fund Loss an '​Isolated Case'". Last night, Bloomberg TV'​s Bernard Lo talked with Peter Crane, founder of Crane Data LLC, on "losses sustained by the Reserve Primary Fund and the impact of the losses on demand for money-​market funds." Bloomberg says, "The 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., sapping confidence in assets once considered among the safest. The oldest U.​S. money-​market fund suspended redemptions and its net asset value fell below $​1 a share."

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Reserve Primary Fund'​s "​breaking the buck" is all over the news today. The first to break was Bloomberg'​s "​Reserve Money Fund Falls Below $​1 a Share". Other coverage includes: USA Today'​s "​Reserve Primary money market fund breaks a buck", NY Times' "​Money Market Fund Says Customers Could Lose Money", WSJ'​s "​Money Fund, Hurt by Debt Tied to Lehman, Breaks the Buck", LA Times' "​Money market fund '​breaks the buck' on Lehman IOUs", Dow Jones' "​Reserve'​s Primary Fund To Be Valued Below $​1/​Share", Barron'​s "​Not Even Money Funds are Safe", Crain'​s NY Business' "​Big money market fund freezes withdrawals", and MarketWatch'​s "​Money market breaks the buck, freezes redemptions". See also ICI'​s "​Statement on Money Market Mutual Funds".

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Today'​s New York Times features "​Where to Keep Cash When No Investment Seems Safe", saying, "CASH used to be the most boring of assets. But not this year. Nervous depositors rushed to withdraw money from IndyMac Bank.... Investors holding supposedly liquid auction-​rate securities were stunned to discover they could not sell them after the markets seized up in the spring. Others watched as a string of money market mutual funds had to be bailed out. And still others suffered losses in ultrashort bond funds, once considered pillars of stability."

It quotes Crane Data'​s Peter Crane, "Normally, bad news for the economy is good news for cash investors. But because of the flight from the subprime mortgage contagion, this time is different." Crane adds, "Don'​t be greedy." With money funds, he tells NYT, don'​t be "`​in the No. 1 yielding anything. You want to be a B student."

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