Posted on 01/27/2010 9:16:18 AM PST by Cheap_Hessian
Zero Hedge discussed a month ago the disastrous prospects of what would happen if the new proposal contemplated by the SEC, which would allow the suspension of redemptions from Money Market Funds, were to pass. Well, in a nearly unanimous vote, Money Market Funds now have the ability to suspend redemptions, courtesy of the SEC's just passed 4-1 vote. This explains the negative rate on bills: at this point, should there be another meltdown, money market investors will not, repeat not, be able to withdraw their money purely on the whim of Mary Schapiro. As the SEC noted: "We understand that suspending redemptions may impose hardships on investors who rely on their ability to redeem shares."
(Excerpt) Read more at zerohedge.com ...
I’m no expert, but this sounds bad.
If you need immediate access to money, put it in savings and checking accounts. That seems to be the message.
The source link is correct, but I think they are getting overloaded.
Well, there goes the money market funds....
.5% - for high balance accounts!
The next step is wholesale confiscation in order to 'stabilize the system'.
Don't worry though. You'll get your money in the form of the new Amero at a 10 for 1 ration.
L
Is a Money Market fund the same as a CD?
Let me think. I could put my $100,000 in a money market fund thereby creating risk that I might not get any of it back, or I could buy short term treasuries. TADA I guess the government is going to find a new source of cash!
"A money market fund's purpose is to provide investors with a safe place to invest easily accessible cash-equivalent assets characterized as a low-risk, low-return investment. Because of their relatively low returns, investors, such as those participating in employer-sponsored retirement plans, might not want to use money market funds as a long-term investment option."
Investopedia explains Certificate Of Deposit - CD:
"A certificate of deposit is a promissory note issued by a bank. It is a time deposit that restricts holders from withdrawing funds on demand. Although it is still possible to withdraw the money, this action will often incur a penalty.
For example, let's say that you purchase a $10,000 CD with an interest rate of 5% compounded annually and a term of one year. At year's end, the CD will have grown to $10,500 ($10,000 * 1.05).
CDs of less than $100,000 are called "small CDs"; CDs for more than $100,000 are called "large CDs" or "jumbo CDs". Almost all large CDs, as well as some small CDs, are negotiable."
just read some of the changes. they must hold 10% of assets in cash or treasuries or other securities tha could turned into cash in one day.at least 30% must be able to be turned into cash in a week. i don’t actually see anything halting withdrawals in the article i’m seeing.
“All your money are belong to us”.
“If you took your 401K money out of the stock market because it was tanking and put it into Money Markets because they’re ‘safe’, think again.”
That is exactly the boat I am in. I went all money market just before the crash, best lucky move I ever made. Luckily I don’t put anything in my 401k anymore (thinking the gov may try to take it somehow) but being still employed, I can’t take it out. I still contribute a small amount to an IRA and it is still in the market, and not doing too bad. But this trip into socialism has really stalled the growth of my retirement funds.
Pulled out of my MM acct. early last year. The Bair increase in FDIC assessments was my wake-up call.
The government doesn't want you to withdraw your money during a crash or meltdown.
It's only fair...if you needed that money, it wouldn't be there anyway.<>
Not savings. I recently opened accounts at a credit union. They (and banks) have the right to delay withdrawl requests from savings. I've never heard of one doing it recently, but it is clear that savings are not demand deposits.
Us too. Fortunately we avoided the big drop. Unfortunately now there's this.
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