Press Releases Archives: November, 2008

"Emergency action resurrects sector" writes the Financial Times, saying, "Money funds might just be the true come-back kid of the current financial crisis. Hit by a near-fatal blow to their safe-as-cash reputation in September, US money market fund assets have now been resurrected to pre-crisis levels." It quotes our Peter Crane, "Money funds had a near-death experience.... [But] 'unprecedented levels of support' from the US Treasury, Federal Reserve, and the companies that sponsor the products, 'appear to have saved the industry and solved the problem'."

"Investors wary of state pool" writes The Miami Herald on the Florida local government investment pool. It says, "A year after many local governments yanked their money out, Florida's local government investment pool has made improvements. But investors still fear they won't recoup their funds." The article quotes Peter Crane, president and CEO of Crane Data, a money market and mutual fund information company, "Holding back redemptions is the kiss of death for money market funds and investment pools.... Safety can be taken for granted. But liquidity is what you count on when you invest in these funds."

"Guarantee for money-market funds facing renewal question" writes New York Daily News. The article says, "After The Reserve Primary Fund broke the buck ... two months ago, investors began to question the safety of all money market funds. Many pulled their cash out. What got them to return is the U.S. Treasury's Temporary Guarantee Program for Money-Market Funds, which is set to expire next month." It quotes our Peter Crane, who expects the guarantees to be extended. "It's almost certain to be renewed. December is too soon.... The big question would be: Is anyone bold enough to step out of the program?" NY Daily News adds, "Crane even sees a possibility that the program will be expanded" and speculates that there's a good chance that the program may eventually become permanent. In other news, Bloomberg writes "AIG, GMAC Help Drive Up Bank Rates Amid 'Insanity' for Deposits", which quotes Pete Crane on some of the highest bank rates, "These banks have to offer a higher rate than anyone else to get over the stigma attached to their names."

Investment News writes "Panel to weigh changes to money funds draws critics", which discusses the ICI's recent announcement to establish a Money Market Working Group. The article says, "A panel that is charged with recommending changes to the ways money market mutual funds operate is being met with skepticism by money fund experts who worry that changes might be unnecessary". It quotes Peter Crane, president of Crane Data LLC, a Westborough, Mass.-based money fund research firm, "Money market mutual funds bring in more revenue per year than Hollywood does at the box office.... It's in the range of $13 billion or $14 billion. You don't want to kill the golden goose." IN quotes `Karen McMillan, general counsel for the ICI, "The working group is still very much in the preliminary stage.... No decisions have been made."

The Associated Press writes, "Not earning much on Treasury bills? Get used to it". The article quotes Wells Fargo portfolio manager Jay Mueller, "If you're a bank that needs to borrow reserves, great. If you're a lender, a saver, an investor in money market funds that tend to buy short-term debt, you're not getting paid much on your money.... People think of cutting interest rates as this wonderful thing that helps everybody. It's a misunderstanding -- it helps some people and hurts others." The piece adds, "To be sure, money has been flowing back into money funds for a few weeks now, a reversal that appears to be letting the funds take on more risk, said Peter Crane, president and publisher of Crane Data LLC. Still, he added, no one is letting go of government debt just yet." It quotes Crane, "Funds continue to buy Treasurys as well. They want to have that liquidity war chest, be stocked to the gills in case anything else occurs."

"Money market funds warm to commercial paper again" writes Reuters, which states, "Prime institutional money funds, the sector hardest hit by outflows following the Reserve Primary fund's 'breaking the buck' downturn, saw assets increased overnight by $5 billion on Tuesday and by $19 billion over the past week, according to data released on Wednesday by Crane Data, a money-market research firm in Westborough, Massachusetts." It quotes Peter Crane, "Prime money funds are the largest purchaser of commercial paper, so commercial paper demand depends heavily on these asset flows.... Everybody is watching the flows. If money funds do not fear redemptions, they will return to commercial paper. Investors are gingerly returning back to money market funds, which allows them to expand their commercial paper holdings. If the Fed buys longer-term paper, then companies will be able to refinance and take back their short-term paper if need be." Also, Bloomberg writes "U.S. Commercial Paper Borrowing at Fed Slows as Rates Plunge".