Posted on 10/01/2008 10:05:38 PM PDT by BurbankKarl
A fund that invests cash for about 1,000 colleges and private schools suddenly froze withdrawals this week, leaving school finance managers scrambling to make sure they have enough money for payroll and other bills.
For 34 years, colleges and schools parked cash in the now $9.3 billion fund, which offered returns slightly above U.S. Treasury bills. That it now might take years for the institutions to get all of their money back shows how widely credit-market woes are reverberating beyond Wall Street.
Monday, Wachovia Corp., the fund's trustee, said it was terminating the fund, liquidating its assets, distributing the proceeds and resigning as trustee, "to ensure that all investors would get equal treatment and that there would be orderly and equal distributions," says Laura Fay, a Wachovia spokeswoman. That stunned some of the colleges, which had believed they could get immediate access to the money if needed.
Wachovia became concerned that there might be the equivalent of a run on the fund, given recent woes with other short-term debt funds, Ms. Fay says.
The Short Term Fund is offered by Commonfund, a Wilton, Conn., nonprofit that advises colleges and schools on money management. Verne O. Sedlacek, Commonfund's chief executive, says 85% of the fund was in "high-quality" commercial paper from blue-chip issuers. The rest is largely in securities backed by assets like mortgages -- the kind of investments that are being especially shunned in the credit crisis. He estimates those are selling for about 89 cents on the dollar.
(Excerpt) Read more at online.wsj.com ...
Told you folks, this is not some made up pre-election crisis. This thing is spreading and is real. Look at the Auto Sales numbers that came out Wednesday for Sept. Less than 1 million units sold in the US. First time since 1993 and worst Sept since 1993.
None of like this bailout, but we got to do something to calm the markets.
bankruptcy would have been a better solution.
Don't like to admit it but we're gonna have some hard times ahead thanks to GREED being allowed to run totally unchecked.
I dont think this bailout is going to help much either...
Why is another 750 billion going to help. The Fed has increased liquidity by more than that aleady and we’re still deep in it.
1) if you leased a car, are up side down on the lease, and now want to buy a car with no money down and roll the lease into it, you have a problem.
2) If you want to buy a car, and the current value of your trade-in + what you owe on it is not enough to make a decent down payment on the new vehicle, you have a problem.
3) If you have a good paid-for-trade-in + a decent down payment and a record of paying your bills and do not have credit card debt coming out your ears, you will get a car loan.
This is a return to fiscal reality. It is the way things were always done 40 years ago, until the “I want it now (and therefore ought to have it)" mentality set in.
Fiscal adults will have no problem.
No man is an island.
A wave in the pond reaches all shores.
At least, someone you know and care for will be affected!
What is there to prove that the banksters are not holding a knife to the taxpayer’s throat? We don’t loan money until we get what we want seems to be their position. There is no liquidity crisis here, it is a credit squeeze. What i’m hearing in the buzz is that people won’t be able to get easy credit anymore. Well, thats the way it should have been in the first place. Giving loans to people who can’t afford it is what got us into this mess.
My personal opinion is that the big banks are squeezing the credit to force congress to bail them out. Disgusting!
Bravo, well said!
Take it up with the agency that rated the bonds, administrators. You thought you had AAA quality but what you really held was junk. Time to make Mr. Standard very, very Poor.
Look at the bright side. If all the socialist professors can’t get paid for a few weeks, their favorite charity, aka the Hussein Obama campaign, will be missing some dollars.
Charlotte, NC will lose at least 5,000 jobs in the financial sector as the commercial banking arm of Wachovia is taken to NYC. An additional 1,000 jobs are slated to be cut in Winston-Salem too from the Wachovia meltdown.
6 manufacturing facilities in NC have closed the last 2 weeks.
August retail numbers were flat when back to school buying usually add a small kick to the overall retail numbers.
You can buy a fully loaded full size Dodge pickup or SUV for 50% of invoice all around the state.
4 of 19 houses in my small average neighborhood are in foreclosure with 3 of the 4 residents of the same dwelling > 14 yrs not due to illness...due to no work in their trades (2 auto and 1 commercial construction).
I read the GOP and McLame's face and other Pubs as the shi$ite is hitting the fan.
Only essential government employees and those working in the medical professions, retail food / gas - grocery stores can considered their employments somewaht stable.
Gas here is $1.40 above MYMEX RBOB; subtract 48.5 cents tax and the distributors are gouging to acquire more cash for the ride coming.
Not pretty at all. One poster a while back...Hydroshock called it correctly as I I too saw this coming back in 2006.
Greed, deceit, bribes kickbacks, unsustainable rise in the price of housing, no domestic energy production increases, unprecedented growth of all levels of government, etc., etc.,
We were ridiculed constantly for being doom and gloomers. It's going to land hard cause this nation and our society is broke only the rich have cash now.
Read recently California's deficit has surpassed $20 billion. Is that true from what you are hearing out there?
The Libs think the lazy should be rewarded as well as the ignorant who blow their incomes.
Thus 'resdistribution' of wealth is their agenda/mandate except, the Lib elite decide who and how much.
That is 180º contrary to the very foundations of a free market society, embracing democratic principle, perpetuating a capitalistic economy where freedom, liberty and the pursuit of happiness is usually rewarded with consistency, innovation, hard work, and a never ending spirit of 'can do' exist.
Welcome to 1984.
I apologize for my mistypes....I’m somewhat agitated these days.
This came from greed. This money should have been invested in nothing but Treasury securities. Trying to suck a few more basis points out of the shady derivatives market so they could pay a fund manager $200K was what led to this.
Ooooh, so then Bush engineered this crisis to defund the Obama campaign just before the election, unless we gave him and his Wall Streeter dictatorial powers over the economy? I may go over to DU and spread that rumor!
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