[lbo-talk] Risky money market funds?

[Carl Remick]

Despite all the fingernail-biting about the potential perils that may lurk 
in the murky world of complex financial derivatives, what I have found most 
spooky is recent intimations that some plain old money market funds may be 
in trouble.  These funds have long been viewed as a haven for tumultuous 
times in investing -- a place to park cash that's virtually as safe as 
FDIC-insured bank accounts.  There have been very few instances where an MMF 
has "broken the buck" -- experienced a price decline below the 
dollar-per-share value these funds normally maintain.

Am I mistaken in believing MMFs are pretty much shielded from possible 
contagion by complex derivatives, or is there less transparency about MMFs 
than I'd assumed?  In any event, is there any significant potential for an 
MMF panic to develop in lieu of the old-fashioned bank runs whose risk has 
been eliminated by FDIC protection?

Carl

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