Posted on 09/04/2009 6:46:53 PM PDT by SeekAndFind
Money funds, once considered a safe place to park cash, could become moderately risky again when the government program hastily initiated last year to guarantee money fund deposits expires on Sept. 18.
In 2008 the colossal Reserve Primary Fund, with $62.5 billion in its portfolio "broke the buck" when Lehman Brothers defaulted on $785 million in bonds which the fund held. Investor redemptions skyrocketed.
This prompted then Treasury secretary Henry Paulson's unprecedented intervention to protect all money market assets, approximately $3.5 trillion, and thus avert a panic, writes Joe Nocera in The New York Times.
"Here we are a year later and the money market fund business seems back to normal," Nocera writes.
"No other money funds have broken the buck."
But now the safety net is gone.
Accordingly, the SEC is proposing new rules for money funds, including stricter liquidity standards.
Some banks, in an effort to attract depositor dollars, are offering more than 2 percent on money market deposits — better than an average non-bank money market yield of less than one percent — with the usual FDIC guarantee up to $250,000, according to Kiplinger's Personal Finance Magazine.
No, those were the prices that the market was willing to bare at the time, and they really haven't gone up much since.
Let's just both bookmark this thread and come back in 6 months.
I used to think a lot like you, but then last September happened and I decide to reevaluate.
Which math?
10-K reports & financial statements especially by banks are almost worthless anymore. Anyone remember what Sarbanes Oxley was? Fannie and Freddie were exempt.
For banks and pretty much the rest of the market - I would rather look at charts. The charts lie less than the “financial” statements.
Taking the loans on the books an giving them the appropriate haircut. Which is about 30% more or less.
You are absolutely right that the 10Q's etc. are worthless especially since this springs FASB 157 ruling.
Those were marks for panic sales, or no trades at all.
and they really haven't gone up much since.
But they really have. There is no panic selling, currently.
Their allowance for loan losses totaled $35.9 billion at June 30, 2009, a coverage ratio of 5.60% of total loans. And their net interest margin is 3.24%
Let's just both bookmark this thread and come back in 6 months.
You bet.
Not a huge fan of techincals but we have to be overbought after the biggest and fastest rally since 1933.
There is just too much debt in the system and that will weigh down everything. Think Japan 1989.
I may move money out of U.S. banks and check out banks like TD and RBC Centura. Canadian banks are among the safest. We also have HSBC which may be okay too.
JPM has huge derivative exposure. I wonder if Mellon/PNC is okay or US Bancorp. Bank of NY too but do they do any consumer? Forbes said Wells Fargo should be okay too.
Agreed on both points. I used to be more into fundamentals buy there is too much lying in the financials. They are as bad as the Chinese or Indians anymore.
We are as corrupt as Russia anymore.
Wells is truly the sick man. I should have used them as my example with the Toddster than Citi.
US Bank might be OK.
Frankly the best domestic picks are local community banks and credit unions.
The regionals are the worst as they are too risky but yet do not have "too big to fail" protection.
I'm also no fan of PNC as they bought NCB that had all that toxic subprime North Carolina Real Estate.
Ain't that the sad truth.
Yeah I figure BOM was an avoid due to leftist Quebec.
Buffett is a big shareholder in Wells so I don’t like them. The CEO is pretty good - his family owned a financial/bank company that actually merged in and took over Wells. I forget their name it was midwestern.
Local banks and CUs but you have to check em out. Ditto on regionals. They took almost the same risks as the big dog sh*t mega banks or money centers.
I thought PNC bought Core States and First Union/Wachovia bought NCNB but I could be wrong.
Boy Wacovia which had also been Bank Atlanta was really ruined when it became part of First Union.
bttt
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