Yesterday, CNBC featured "Why Your Money-Market Fund Could Be Hit by Greek Default". The online article (page down in the story for the link to the video) says, "Some of the safest, plain-vanilla investment accounts in the U.S. could be challenged if Greece defaults on its sovereign debt. Forty-four percent of money-market funds in the U.S. are invested in the short-term debt of European banks, according to a report from Fitch. A separate report from Moody's noted that 55 percent of those holdings are in the commercial paper of French banks, such as Societe Generale, BNP Paribas and Credit Agricole. French banks are some of biggest creditors to Greece, with over $53 billion in outstanding loans to the Greek government and private sector. While fund managers have had plenty of warning of the potential of a default in Greece, many would likely still be caught off guard. Many fund managers assume that a bailout will prevent a default by Greece. The bankruptcy of Lehman Brothers similarly caught money-market fund managers off guard, famously causing the Reserve Fund to "break the buck.". The debt of these French banks is still very highly rated and Moody's says the risk of default on the short-term debt is very low."
