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Possible 4th Bank wave?



July 01, 2009 – Comments (0)

I was talking with a friend, who's opinion I value, and he mentioned that the government is quietly checking into the viability of uninsured money market funds.

Sure enough I seach Google News and find this link.

The problem with the Money Market Funds is that they frquently have check writing privileges and sold most often by banks.

If these things do "break the buck" and the law locks the buyer from accessing his money, he's gonna float checks that will bounce and respond by removing his money from the bank that sold him on the fund.

If one fund goes down, it could create a bank run on several banks and remaining money market funds will struggle with people demanding their money, while they hold illiquid assets.

I'll name the bailout program MARS.

Money Market Funds




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