Wachovia Limits Access to $9.3 Billion Investment Fund for 900 Colleges

[marmar]

from Bloomberg:



Wachovia Limits Access to $9.3 Billion Fund for 900 Colleges

By David Olmos and David Mildenberg

Oct. 2 (Bloomberg) -- Wachovia Corp. curbed access to a $9.3 billion investment fund used by more than 900 colleges to pay salaries, maintenance and other expenses and said it plans to sell the portfolio by the end of the year.

Colleges can only redeem 34 percent of their investments in the short-term Commonfund because of the ``liquidity squeeze,'' said Laura Fay, a spokeswoman for Charlotte, North Carolina-based Wachovia, in an interview. Earlier this week, Wachovia had capped availability at 10 percent.

Fay said the ``unprecedented environment'' in the market contributed to Wachovia's decision to curtail the fund and plan its closure by Dec. 31. The vote Sept. 29 by the U.S. House of Representatives rejecting a $700 billion financial-rescue package influenced the decision, she said. Wachovia agreed Sept. 29 to sell its banking operations to Citigroup Inc.

Whether the fund can provide all of the money to the colleges ``depends if some of the pressure eases in the market place,'' Fay said. ``Our intent is to unwind the portfolio in as prudent a way as possible and provide as much liquidity as we can.''

Wachovia's move took the Commonfund by surprise, said John Griswold, executive director of the Commonfund Institute, the research arm of the Wilton, Connecticut-based investment adviser.

``Wachovia was the trustee of the fund and they resigned and closed it,'' Griswold said in a telephone interview. ``Everybody was upset to hear this news, especially at the end of a quarter, when they have to make payroll and cover expenses, and it was uncertain how quickly they could get access.'' ......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=a6mtWqcKsqGA&refer=home

[Renew Deal]

1. A DUer posted something related to this yesterday.

The Dean of the Univ. of VT sent a letter to all staff addressing the situation.

[HamdenRice]

2. Yet many DUers think these concrete facts are "sky is falling" false "terra"

I honestly don't understand how anyone can look at the facts and say there is no crisis. This is separate from disagreeing over the bailout. But there are many, many people who still think that this is an entirely made up crisis.

Until their employer can't make payroll, no facts will be able to penetrate their world view.

It's very depressing.

[Supersedeas]

3. does it look like we have our priorities mixed up?