Money Market Account?

[Lusitan]

Whatever money was already in my Vanguard money market account when the sh!t his the fan, I've kept there for now. It's basically my dry powder for my IRA contributions and possibly some additional after-tax investments.

All new short-term/emergency savings I have diverted to FDIC insured savings accounts. That's only partly due to the recent mess though - I tapped my e-fund to pay down some debt recently, and I am building it back up. I have always kept that in FDIC insured accounts.

 

[happy2bretired]

I had about $17K left over from my husband's life insurance sitting in a Met Life money market account. I closed it out last week, rec'd the check and deposited it in my local credit union. The credit union put a hold on it for 5 days...I assume that's normal, but not sure.

 

[OAG]

It is normal. Something they can do based loosely on post 9/11 rules.

 

[Bikerdude]

Most of my cash is in Vanguard's Admiral Treasure Money Market Fund (VUSXX). I have a little in Vanguard Prime Money Market Fund (VMMXX) and a little in an FDIC-insured bank account.

Don't forget that over the weekend it was decided that the federal guarantee of money market funds was ONLY for money already there. New money deposited in MM accounts after last Friday will not be guaranteed. This is to prevent a run on the banks, where FDIC insured savings accounts often pay lower interest than MM funds.

OK, where did I read that. Umm. If I find the link, I'll post it.

I have heard several 'money people' speak about the treasury MM guarantee and not one mentions the above catch. I'm wondering if the "catch" applies just to the immediate guarantee that was issued to prevent a 'run' and when the fund applies for coverage then all future balances will be fully guaranteed.

 

[W2R]

I have heard several 'money people' speak about the treasury MM guarantee and not one mentions the above catch. I'm wondering if the "catch" applies just to the immediate guarantee that was issued to prevent a 'run' and when the fund applies for coverage then all future balances will be fully guaranteed.

I have heard/read it mentioned several times, though I have only been inspired to look up one citation for it. The Washington Post is reputable for some reason although it is not a Bible of financial or other information (especially for conservatives such as myself). Still, a person would have to be pretty slow to ignore something like this or assume anything otherwise until they have found something definite provided by an equally reliable source specifically saying the contrary, it seems to me. Caveat emptor.

The Crisis and Your Pocketbook - washingtonpost.com

Last week, the U.S. Treasury Department promised to insure the value of deposits in money-market mutual funds, much the same way that the Federal Deposit Insurance Corp. protects the first $100,000 in your bank account: Whatever you put in, the government now guarantees you'll get out.

However, the Treasury has since said that its umbrella is limited to deposits made before the close of business Sept. 19, the day the measure was announced. New accounts or money added to existing accounts will not be covered.

There's another catch: The guarantee is not automatic. Your money-market fund must pay a fee to participate in the program, and it's unclear which funds will join. The fee will probably be based on the amount of assets, although details are still being worked out, according to Treasury spokeswoman Jennifer Zuccarelli. The guarantee will last one year.

Money-market funds are operated by mutual fund companies. They are different from the money-market accounts offered by banks, which are federally insured and are advertised as a safe way to store money at higher interest rates than traditional savings accounts. Money-market funds are typically investments in short-term debt issued by large, stable institutions. That makes the funds low risk -- but not no risk.

 

[W2R]

I found a link at the Treasury Department that is intended to clarify this information, and mentions the September 19th date.

U.S. Treasury - Press Releases - September 2008

(Click on: "9/21/2008 Treasury Provides Clarity for Money Market Funds Guaranty Program")

September 21, 2008
hp1151

Treasury Provides Further Clarity For Guaranty Program for Money Market Funds​

Washington – The U.S. Treasury Department is continuing to develop the specific details surrounding the temporary guaranty program for money market funds that was announced on September 19, 2008.
While these details are being finalized, Treasury is making the following clarifications:
1. All money market mutual funds that are regulated under Rule 2a-7 of the Investment Company Act of 1940 and are publicly offered and registered with the Securities and Exchange Commission will be eligible to participate in the program.
2. Eligible funds include both taxable and tax-exempt money market funds. The Treasury and the IRS intend to issue guidance that will confirm that participation in the temporary guaranty program will not be treated as a federal guaranty that jeopardizes the tax-exempt treatment of payments by tax-exempt money market funds.
3. The temporary guaranty program will be designed to provide coverage to shareholders for amounts held by them in such funds as of the close of business on September 19, 2008.
4. Further details on other aspects of the temporary guaranty program and the required documentation for funds to participate will be provided in the coming days.

There are also two other related press releases, released on September 29th.

 

[Bikerdude]

I found a link at the Treasury Department that is intended to clarify this information, and mentions the September 19th date.

U.S. Treasury - Press Releases - September 2008

(Click on: "9/21/2008 Treasury Provides Clarity for Money Market Funds Guaranty Program")



There are also two other related press releases, released on September
29th.

OK. That's a little clearer. So I guess there was never was any "temporary" temporary coverage for MM accounts. There is only the "temporary" insurance once your fund applies. And that only applies to balances as of 9/19/08.

Thanks for the info.