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To solve the problems they (the management companies) purchased the impaired securities from the funds, for the original amounts the fund paid, and put them on their own balance sheets. Couldn't stand the loss of confidence, and that was at a time when funny money securities hadn't been invented.
Much the same thing that the new Chairman of Citi just did with billions of their impaired Structured Financial Vehicles. We'll probably see other follow the same path if their capital structure permits it.
BTW, just looked at my son's accounts again, still stuck in the old funds after their rep said he would make an exception and transfer them to governments by today.
Also, this week Schwab closed another money fund to new investors.Next week I'm going to sell all non governmental money funds in my son's accounts and buy T-Bills. Commissions yes but at least I'll get out at $1.00, unless they close redemptions also.
I personally don't think we are even close when it comes to knowing when this is going to be over and/or how much it will cost everyone.
Richard Funkhouser Gary Fritz wrote:
Given the credit crunch, those higher risk profiles have become, for many investors, more risk than they are willing to expose themselves to, and they have therefore decided to opt for quality rather thanrate -- and that means government or treasury securities.I wonder 1) what are the chances of money-market funds losing value and going below $1.00 NAV, and 2) if that happens, how soon and how rapidly it is likely to happen.Assuming you have the ability, switching from money funds into government securities seems like a prudent move. And then you hope THOSE say solvent...I wonder if overseas bonds would be any better?