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I have been doing some online detective work, nosing around these topics today and how secure they are, which ones on the ropes maybe, etc.
I discovered today that my Local community College retirement account balance / investment is held by AIG retirement, a subsidiary of AIG. That is all I know at this time about it, except that lucky me, I don't have much invested in it, which is why I did not realize it was AIG, you know, the one the Fed / Treasury bailed out the other day.
Here are some links to the details of the recent money market fund mayhem that happened while I was busy dealing with Huricane Ike. Talk about week, or month of disasters. Won't be sirprized to see it named in history as Bloody September.
http://community.marketwatch.com/Wallstreetcrooks
"The amounts are absurdly large. The total "notional," or face value, of derivatives held by U.S. banks is $180 trillion, and it's three times that much globally."
"Concentrated in the hands of five major players. Nearly 97% of all U.S. bank-held derivatives are concentrated in the hands of just five major U.S. banks — JPMorgan Chase, Citibank, Bank of America, Wachovia and HSBC"
"Big brokers are also loaded with derivatives. Merrill Lynch has $4.2 trillion. Morgan Stanley has $7.1 trillion. As best we can determine, Lehman Brothers has significantly less — $729 billion. But in proportion to its dwindling capital, its exposure seems to be among the worst."
http://biz.yahoo.com/ap/080929/fed_credit_crisis.html
"Moreover, the Fed will make a total of $620 billion available to other central banks, expanding ongoing currency "swap" arrangements with them where dollars are traded for their currencies. That's up from $290 billion previously in such arrangements.The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Swiss National Bank and the central banks of Denmark, Norway, Australia and Sweden are involved in those swap arrangements.
The move comes as the U.S. financial meltdown's tendrils have ensnared banks in Britain, the Benelux and Germany."
http://finaxyz.blogspot.com/2008/09/confidence-in-fidelity-money-market.html
http://www.marketwatch.com/news/sto...x?guid={56A2CEE5-5A53-4A27-A4BA-585CFBE173A4}
"NEW YORK (Fortune) -- A large Bank of America money market fund has over $600 million of exposure to Cheyne Finance, the structured investment vehicle (SIV) that recently defaulted on its obligations.As of Oct. 12, Bank of America's $67-billion Columbia Cash Reserves fund had approximately $640 million - or just under 1% of its assets - invested in Cheyne, according to Jon Goldstein, a Bank of America spokesman. "Up until now, Cheyne has been paying its maturities as they come due," Goldstein said. He added that Deloitte, the firm acting as receiver for Cheyne, said this week that it was pleased with the progress of efforts to refinance and shore up the troubled SIV."
"It's but the latest blow to SIVs - large, lightly-regulated debt funds that have run into a liquidity squeeze as investors have balked at buying the securities that SIVs issue to fund themselves. Experts estimate that some $400 billion is tied up in SIVs. Banks like Citigroup (Charts, Fortune 500) have set up SIVs themselves and have been allowed to keep them off their balance sheets - an omission which causes problems for investors and regulators because they can't easily gauge the banks' true exposure to SIVs.
Banks and other financial firms are also exposed to the SIVs because they have bought securities issued by the SIVs. Along with banks like Bank of America (Charts, Fortune 500) and JP Morgan Chase, the U.S. Treasury is trying to organize support for the SIVs, because they fear that, without such help, the SIVs may have to sell off their assets to raise funds, which could drive markets lower. Friday's steep dive in stock prices reflects, in part, fears that credit markets will deteriorate still further."
"Other financial institutions have had to deal with the negative impact of SIVs on their money market funds. On Friday, Wachovia (Charts, Fortune 500) said it booked a $40 million loss related to the purchase of "certain asset-backed commercial paper" from money market funds run by its Evergreen asset management arm. (One of the things SIVs issue is asset-backed commercial paper, which is basically short-term debt that is collateralized with assets, although those assets may just be other types of debt.) It appears that the banking arm of Wachovia took that writeoff to make sure that its money market funds didn't have to take a loss. "Evergreen has reduced and eliminated exposure to asset-backed commercial paper," says Laura Fay of Evergreen."
"As of Sept. 30, Fidelity's $305 billion of money market funds had 2.3% of their holdings - or about $7 billion - in SIV debt securities, according to company spokesman Alexi Maravel. The SIVs in question are Asscher Finance, Beta Finance, Centauri Corp., Dorada Finance, Cullinan Finance, K2 Finance, Links Finance and Nightingale Finance. Fidelity's Maravel says: "We can state unequivocally that Fidelity's money market funds continue to provide safety and security for our clients' cash investments. We continue to invest in money market securities of the highest quality, and our clients continue to have full access to their holdings to invest as they wish."
http://money.cnn.com/2007/10/19/magazines/fortune/eavis_boa.fortune/
http://www.kiplinger.com/columns/picks/archive/2008/pick0929.htm
http://biz.yahoo.com/ms/080917/253485.html?.v=1
http://www.kiplinger.com/columns/fundwatch/archive/2008/fundwatch0924.htm
"Money-fund shareholders, mainly institutions, became concerned about potential losses and withdrew slightly more than $133 billion from Reserve Primary and other funds between September 16 and September 19. Regulators worried that this could turn into a Depression-style run on the funds. That might have led to a "full-scale meltdown," says Peter Crane, president of Crane Data, which tracks money funds.
To prevent a run, which would heighten the crest of the ongoing financial tsunami, the Treasury Department announced it would create a temporary insurance system for money funds. To do that, it would use $50 billion in assets from the Exchange Stabilization Fund, which was created in 1934 "to promote international financial stability." The insurance, which covers assets in money funds as of September 19, will last for a year and will be available to both taxable and tax-free money-market funds that pay the required fee. The fee hasn't been set yet, but it will be based on a fund's assets."
http://www.kiplinger.com/columns/fundwatch/archive/2008/fundwatch0917.htm
http://online.wsj.com/article/SB122247111922280837.html?mod=googlenews_wsj
"
The yield escalation has been striking. According to a Securities Industry and Financial Markets Association index, high-quality municipal bonds rose to 7.96% Wednesday, from 5.15% in the prior week and 1.79% the week before that.
Municipal bonds have historically yielded less than Treasurys because investors don't have to pay taxes on munis. But now 30-year municipal bonds yield about 120% of 30-year Treasurys. That ratio is "about as high as it's ever been," says Matt Fabian, senior municipal analyst at Municipal Market Advisors.
Also propelling muni-fund yields skyward is a freeze-up in so-called variable-rate demand notes, or VRDNs, which comprise about $500 billion of the $2.7 trillion municipal-bond market.
VRDNs are short-term obligations that reset their interest rates on a weekly or even daily basis. If the notes can't be sold, the VRDNs are "put" back to banks that backstop them for a fee.
VRDNs have grown popular since the market for a similar type of debt called auction-rate securities has seized up this year. But after the collapse of Lehman Brothers Holdings Inc. this month, even the VRDN market has been thrown into disarray.
Money-market funds that are typically big buyers have been rapidly ditching the debt amid fears about the strength of backstopping banks. Because so many VRDNs are getting cashed out, the dealers that handle the debt are in turn demanding higher yields for remaining VRDNs, in an attempt to entice buyers.
VRDN yields hit 6% this month, up from a typical 2%. Such rates could continue to spike as investors grow increasingly fearful that backstopping banks could get downgraded by ratings firms.
Mr. Fabian, the analyst, notes that new VRDN issuance has become "almost nonexistent," while $10 billion in municipal deals overall have been postponed in the past two weeks because of weak demand. This includes $600 million in Hawaii state bonds.
Other issues are also scaring investors. Many exited from municipal money funds after money fund Reserve Primary Fund fell below $1 a share in net asset value earlier this month.
The muni money funds' problems have prompted government intervention. Sunday, the Treasury announced that tax-exempt money-market funds will be included in a rescue insurance program for money funds, tapping up to $50 billion to support the effort."
http://custom.marketwatch.com/custom/earthlink-net/mw-news.asp?guid={BC9E5FCA-B9B7-4FF9-903C-E92319A0A019}
I discovered today that my Local community College retirement account balance / investment is held by AIG retirement, a subsidiary of AIG. That is all I know at this time about it, except that lucky me, I don't have much invested in it, which is why I did not realize it was AIG, you know, the one the Fed / Treasury bailed out the other day.
Here are some links to the details of the recent money market fund mayhem that happened while I was busy dealing with Huricane Ike. Talk about week, or month of disasters. Won't be sirprized to see it named in history as Bloody September.
http://community.marketwatch.com/Wallstreetcrooks
"The amounts are absurdly large. The total "notional," or face value, of derivatives held by U.S. banks is $180 trillion, and it's three times that much globally."
"Concentrated in the hands of five major players. Nearly 97% of all U.S. bank-held derivatives are concentrated in the hands of just five major U.S. banks — JPMorgan Chase, Citibank, Bank of America, Wachovia and HSBC"
"Big brokers are also loaded with derivatives. Merrill Lynch has $4.2 trillion. Morgan Stanley has $7.1 trillion. As best we can determine, Lehman Brothers has significantly less — $729 billion. But in proportion to its dwindling capital, its exposure seems to be among the worst."
http://biz.yahoo.com/ap/080929/fed_credit_crisis.html
"Moreover, the Fed will make a total of $620 billion available to other central banks, expanding ongoing currency "swap" arrangements with them where dollars are traded for their currencies. That's up from $290 billion previously in such arrangements.The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Swiss National Bank and the central banks of Denmark, Norway, Australia and Sweden are involved in those swap arrangements.
The move comes as the U.S. financial meltdown's tendrils have ensnared banks in Britain, the Benelux and Germany."
http://finaxyz.blogspot.com/2008/09/confidence-in-fidelity-money-market.html
http://www.marketwatch.com/news/sto...x?guid={56A2CEE5-5A53-4A27-A4BA-585CFBE173A4}
"NEW YORK (Fortune) -- A large Bank of America money market fund has over $600 million of exposure to Cheyne Finance, the structured investment vehicle (SIV) that recently defaulted on its obligations.As of Oct. 12, Bank of America's $67-billion Columbia Cash Reserves fund had approximately $640 million - or just under 1% of its assets - invested in Cheyne, according to Jon Goldstein, a Bank of America spokesman. "Up until now, Cheyne has been paying its maturities as they come due," Goldstein said. He added that Deloitte, the firm acting as receiver for Cheyne, said this week that it was pleased with the progress of efforts to refinance and shore up the troubled SIV."
"It's but the latest blow to SIVs - large, lightly-regulated debt funds that have run into a liquidity squeeze as investors have balked at buying the securities that SIVs issue to fund themselves. Experts estimate that some $400 billion is tied up in SIVs. Banks like Citigroup (Charts, Fortune 500) have set up SIVs themselves and have been allowed to keep them off their balance sheets - an omission which causes problems for investors and regulators because they can't easily gauge the banks' true exposure to SIVs.
Banks and other financial firms are also exposed to the SIVs because they have bought securities issued by the SIVs. Along with banks like Bank of America (Charts, Fortune 500) and JP Morgan Chase, the U.S. Treasury is trying to organize support for the SIVs, because they fear that, without such help, the SIVs may have to sell off their assets to raise funds, which could drive markets lower. Friday's steep dive in stock prices reflects, in part, fears that credit markets will deteriorate still further."
"Other financial institutions have had to deal with the negative impact of SIVs on their money market funds. On Friday, Wachovia (Charts, Fortune 500) said it booked a $40 million loss related to the purchase of "certain asset-backed commercial paper" from money market funds run by its Evergreen asset management arm. (One of the things SIVs issue is asset-backed commercial paper, which is basically short-term debt that is collateralized with assets, although those assets may just be other types of debt.) It appears that the banking arm of Wachovia took that writeoff to make sure that its money market funds didn't have to take a loss. "Evergreen has reduced and eliminated exposure to asset-backed commercial paper," says Laura Fay of Evergreen."
"As of Sept. 30, Fidelity's $305 billion of money market funds had 2.3% of their holdings - or about $7 billion - in SIV debt securities, according to company spokesman Alexi Maravel. The SIVs in question are Asscher Finance, Beta Finance, Centauri Corp., Dorada Finance, Cullinan Finance, K2 Finance, Links Finance and Nightingale Finance. Fidelity's Maravel says: "We can state unequivocally that Fidelity's money market funds continue to provide safety and security for our clients' cash investments. We continue to invest in money market securities of the highest quality, and our clients continue to have full access to their holdings to invest as they wish."
http://money.cnn.com/2007/10/19/magazines/fortune/eavis_boa.fortune/
http://www.kiplinger.com/columns/picks/archive/2008/pick0929.htm
http://biz.yahoo.com/ms/080917/253485.html?.v=1
http://www.kiplinger.com/columns/fundwatch/archive/2008/fundwatch0924.htm
"Money-fund shareholders, mainly institutions, became concerned about potential losses and withdrew slightly more than $133 billion from Reserve Primary and other funds between September 16 and September 19. Regulators worried that this could turn into a Depression-style run on the funds. That might have led to a "full-scale meltdown," says Peter Crane, president of Crane Data, which tracks money funds.
To prevent a run, which would heighten the crest of the ongoing financial tsunami, the Treasury Department announced it would create a temporary insurance system for money funds. To do that, it would use $50 billion in assets from the Exchange Stabilization Fund, which was created in 1934 "to promote international financial stability." The insurance, which covers assets in money funds as of September 19, will last for a year and will be available to both taxable and tax-free money-market funds that pay the required fee. The fee hasn't been set yet, but it will be based on a fund's assets."
http://www.kiplinger.com/columns/fundwatch/archive/2008/fundwatch0917.htm
http://online.wsj.com/article/SB122247111922280837.html?mod=googlenews_wsj
"
The yield escalation has been striking. According to a Securities Industry and Financial Markets Association index, high-quality municipal bonds rose to 7.96% Wednesday, from 5.15% in the prior week and 1.79% the week before that.
Municipal bonds have historically yielded less than Treasurys because investors don't have to pay taxes on munis. But now 30-year municipal bonds yield about 120% of 30-year Treasurys. That ratio is "about as high as it's ever been," says Matt Fabian, senior municipal analyst at Municipal Market Advisors.
Also propelling muni-fund yields skyward is a freeze-up in so-called variable-rate demand notes, or VRDNs, which comprise about $500 billion of the $2.7 trillion municipal-bond market.
VRDNs are short-term obligations that reset their interest rates on a weekly or even daily basis. If the notes can't be sold, the VRDNs are "put" back to banks that backstop them for a fee.
VRDNs have grown popular since the market for a similar type of debt called auction-rate securities has seized up this year. But after the collapse of Lehman Brothers Holdings Inc. this month, even the VRDN market has been thrown into disarray.
Money-market funds that are typically big buyers have been rapidly ditching the debt amid fears about the strength of backstopping banks. Because so many VRDNs are getting cashed out, the dealers that handle the debt are in turn demanding higher yields for remaining VRDNs, in an attempt to entice buyers.
VRDN yields hit 6% this month, up from a typical 2%. Such rates could continue to spike as investors grow increasingly fearful that backstopping banks could get downgraded by ratings firms.
Mr. Fabian, the analyst, notes that new VRDN issuance has become "almost nonexistent," while $10 billion in municipal deals overall have been postponed in the past two weeks because of weak demand. This includes $600 million in Hawaii state bonds.
Other issues are also scaring investors. Many exited from municipal money funds after money fund Reserve Primary Fund fell below $1 a share in net asset value earlier this month.
The muni money funds' problems have prompted government intervention. Sunday, the Treasury announced that tax-exempt money-market funds will be included in a rescue insurance program for money funds, tapping up to $50 billion to support the effort."
http://custom.marketwatch.com/custom/earthlink-net/mw-news.asp?guid={BC9E5FCA-B9B7-4FF9-903C-E92319A0A019}
arty:
