TD Waterhouse Money Market "Breaks the Buck"??

[abumbyanyothername]

Can anyone confirm this rumor?

<< <TDameritrade is refusing to pay on market funds. They say their reserve is below a $1 and so effect 9-16-08 they will pay only .97 cents per 1.00. On 500,000 that would amount to 15000 loss. >>>

This will cause a run on the system that will bring everyone to their knees. Money market funds hold $4.5 Trillion in assets, and I would be shocked if the institutions are prepared to pay redemption requests on even $500 Billion of that.

[lapfog_1]

1. I've heard rumor of this, but haven't seen a confiirmed source for it - n/t

[high density]

2. Dunno where you got that from, but I don't think this is a TD Ameritrade fund

It's the "Reserve Primary Fund" that was reported on earlier in the week.

http://www.marketwatch.com/news/story/money-fund-cut-may-cost/story.aspx?guid={2820A630-C31B-44F8-8D3D-7BB6990913B3}&dist=msr_6

http://www.reservefunds.com/

TD Ameritrade has a money market account, but that's an FDIC insured banking product.

[Alhena]

3. The Treasury announced they will guarantee all money market funds

[bunnies]

4. Read here: Money-Market Funds Get $50 Billion Backstop From U.S.

(snip)

The U.S. Treasury will use an existing $50 billion emergency pool to offset any losses incurred by investors as fund managers cope with the worst financial crisis since the Great Depression. The plan is similar to federal insurance on U.S. bank accounts, though it's temporary and doesn't carry the same $100,000 limit on reimbursements, a Treasury official said today on a conference call.

Officials rushed to put the plan in place after confidence in money funds was undermined by the $60 billion Reserve Primary Fund, which said Sept. 16 that it couldn't cash out investors in full because of losses on Lehman Brothers Holdings Inc. debt. The New York-based fund was only the second ever to fall below the $1-a-share paid by investors, known as breaking the buck. In the following two days, investors pulled $145.3 billion from funds, or 4.2 percent of industry assets, according to Money Fund Report, a newsletter in Westborough, Massachusetts.

``This came just in the nick of time,'' Peter Crane, president of Crane Data LLC, also in Westborough, said in an interview. ``We were likely going to see more funds halt redemptions'' and break the buck.

(snip)

more: http://www.bloomberg.com/apps/news?pid=20601087&sid=ajCjBX3zUQRw&refer=home

[high density]

5. Right, but that's only if the fund pays for the coverage.

[abumbyanyothername]

6. I really believe that all this USGOV

insurance of what are essentially loans (including bank deposits) is not a good idea. People get too complacent.

It allows for the unnatural pooling/accumulation of capital and inevitably we are going to have the kinds of meltdowns we are seeing now.

[bunnies]

8. oh.

Shows what I know. I dont have a MM acct... can you tell? :hi:

[mnhtnbb]

7. Putnam Funds has closed their money market fund and is distributing

proceeds.

http://seekingalpha.com/article/96301-putnam-liquidates-12-billion-prime-money-market-fund

I use TD Ameritrade and will check their website now.

[mnhtnbb]

9. There is no indication from TD Ameritrade that their money market

funds are being liquidated for anything less than $1.00.

http://www.tdassetmanagementusa.com/tdamusa/jsp/IndividualInvestors/p_IndividualInvestorsOverview.jsp

Also, their money market funds had no exposure to Lehman Bros.

[mnhtnbb]

10. Another resource discussing the risk

http://www.bankrate.com/brm/news/investing/bankrate_investing_news_c1.asp