Quote:
Originally Posted by audreyh1
I'm a little confused by your post. The MM funds referred to by the OP and Debinov are mutual fund money market funds, not accounts held in a bank. Different rules, no FDIC protection for brokerage MM funds. Nothing to do with bank liquidity.
Some banks do call their checking or savings account money market accounts (not funds). Different beast, although the terminology can be confusing.
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I did detail the new regulations required by the SEC for mutual fund MM funds in the first part of my post. My point was I would not switch money from Vanguard's MM fund to a bank account out of fear of losing money in these funds due to the new regulations. The fees and gates to be possibly enacted would only mean losing money if you panic and try to withdraw funds. Sure, even in addition to these new restrictions, you could lose money, but I think the risk is very, very low.
Also Vanguard's seven retail funds are available
only to individual investors. These are the funds Vanguard will seek to maintain a stable $1 share price. It is the institutional investors or those registered as endowments, foundations, etc. that will be stuck with the floating NAV.
Plus, if markets collapse I actually think you would see a inflow of money into mutual MM funds and as people exceeded their bank accounts with FDIC amounts capped at $250,000 those that panic would seek "safer" investments. And Vanguard is no Lehman Brothers. It's comparing apples to oranges. LEhman was wrapped up in the subprime mortgage fiasco. Not so with Vanguard.
I just think it is not something that would cause me to switch out to FDIC bank accounts.