The news from Morgan Stanley follows the disclosure by BlackRock Inc.
last week that investors yanked $53.8 billion from its money market and
securities-lending funds in the last two weeks of September.
A run on money market funds, long considered one the safest places to
park money, was triggered last month by the failure of Lehman Brothers
Holdings Inc., after Reserve Primary Fund "broke the buck" and wrote down to
zero the value of $785 million of the bank's bonds the day after it
filed for Chapter 11. The write-down resulted in the fund's asset value
dropping below the $1 a share purchase price. Already shaken by the
failure of Lehman, investors weren't taking chances with money market
funds, and withdrawals began quickly. The Federal Reserve ended up
setting up multiple
lending facilities to restore confidence in the
$3.54 trillion money market fund industry.
- George WhiteSee Bloomberg storySee Dealscape post on Fed money market program
Comments
Morgan Stanley's money market funds were under siege in September as clients withdrew $46 billion -- nearly one-third of the account's total -- forcing the bank to prop them up with the purchase of $23 billion of securities held by the funds, according to a Bloomberg report.
Is Soros powerful enough to have started something like this?