money markets unchanged since 2008 crisis, remain big risk

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http://www.nationofchange.org/money-markets-largely-unchanged-2008-crisis-remain-big-risk-1331561790

Plain-vanilla money mar­ket funds, part of the skele­tal struc­ture of Amer­i­can fi­nance, may be a $2.7 tril­lion dis­as­ter hid­ing in plain site.

When Con­gress in 2010 passed the most sweep­ing re­vamp of fi­nan­cial reg­u­la­tion since the Great De­pres­sion, it tried to ad­dress most of the prob­lems that led to or were ex­posed by the near-col­lapse of the fi­nan­cial sys­tem. Money mar­ket funds slipped through the cracks.

Money mar­ket funds, a $2.7 tril­lion in­dus­try, re­main largely un­reg­u­lated. They re­main vul­ner­a­ble to runs from in­vestors, who re­tain the false per­cep­tion that there's no risk in them. The funds have been pitched as "can't fail" in­vest­ments, yet as re­cently as last sum­mer the largest money mar­ket funds had 45 per­cent of their as­sets tied up in Eu­ro­pean bank debt.

"Noth­ing in fi­nan­cial ser­vices is as dan­ger­ous as a guar­an­tee with­out cap­i­tal back­ing it," Sal­lie Kraw­check, the for­mer pres­i­dent of wealth man­age­ment for Bank of Amer­ica, warned in a re­cent essay in The Wall Street Jour­nal.