Friday, September 19, 2008

Things That Go Poof

From my iGoogle page, I monitor a number of news feeds.

The headline below, obviously, would catch my eye. The Fed is now backstopping the mutual fund industry and, yet, corporate officials are apparently still hesitant to park money there. My enquiring mind wanted to know more. I clicked on the story. Poof, Wham, Bam, Gone.

I even googled the first sentence. No luck the only link that shows up is the dead link. I hope the reporter survived.

File under Censorship?

Corporate Treasurers Remain Wary Of Money-Market Funds -
SAN FRANCISCO -(Dow Jones)- An explicit government guarantee of money-market funds will likely put a floor under the struggling $3.4 trillion market, but corporate cash that fled it won't be tempted back until both stability and yields rise...

-Robert Wenzel.


  1. Wasn't easy, but I tracked it down. (SmartMoney gets Dow Jones News Wire Stories.):

    Corporate Treasurers Remain Wary Of Money-Market Funds

    Published: September 19, 2008

    By Andrew Morse

    SAN FRANCISCO -(Dow Jones)- An explicit government guarantee of money-market funds will likely put a floor under the struggling $3.4 trillion market, but corporate cash that fled it won't be tempted back until both stability and yields rise.

    Beginning late last year, many corporate treasurers began moving cash out of money-market funds that invested in short-term company debt. Normally those funds, which had been considered so safe that they were marketed as proxies for cash, offer interest rates higher than those found on short-term government bonds.

    The market seized up this week when a major money-market-fund manager said deposits were now worth less than original investments and another major fund manager shut down one of its funds. By Friday, the situation was so extreme the U.S. Treasury Department said it would guarantee money-market funds.

    Whether the government's move will tempt corporate money back into money markets remains an open question. Companies, large and small, often used money-market funds to generate additional returns with their idle cash. The cash placed in money-market funds specializing in commercial paper was often used to buy short-term debt issued by other companies, allowing them to roll over debt and finance their operations.

    But the 18-month-old credit crisis has changed perceptions of the creditworthiness of such investments. As the crisis gathered steam, corporate treasurers increasingly decided the incremental gains in yield the funds offered wasn't worth the additional risk. Instead, many started putting money in U.S. government debt funds or U.S. Treasuries themselves.

    Irvine, Calif.-based Edwards Lifesciences Corp. (EW) was one. Wary of growing financial-markets fragility, the maker of replacement heart valves began shifting short-term cash investments out of corporate paper funds and into Treasury funds exclusively in December. Now, it won't move into other investments until it sees them stabilize.

    "Once we perceive there to be a reduction of volatility in the financial markets, we will consider investing our cash balances in other investment vehicles than U.S. government-backed funds," Amanda Fowler, a spokeswoman for the company wrote in an email. Edwards had $188 million in cash and cash equivalents at the end of the second quarter.

    Analysts who monitor money markets say that companies, as well as individual investors, also are unlikely to commit large sums of money to such funds until yields rise. A typical money-market account offers a 2.4%, according to That's just 2.5 basis points higher than the 2.375% offered on a two-year Treasury.

    "In a low-yield environment, safety and convenience is more important that an extra 20 basis points," said Charles Biderman, who runs TrimTabs Investment Research, a Sausalito, Calif.-based fund-research company.

    The problem in money-market funds grew as the global credit crisis made it increasingly difficult for the companies whose debt was in them to roll over their obligations. The troubles grew earlier this week when a fund series run by New York-based Reserve Management Co. dropped to 97 cents per share, meaning that every dollar deposited into them had lost three cents in value.

    Reserve Management said the collapse of investment bank Lehman Brothers Holdings Inc. (LEHMQ), whose debt was held by the fund, had caused a sudden drop in value. It said it would redeem shares at $1.00 apiece.

    On Thursday, another fund-management company, Boston-based Putnam Investments, closed its $12.3 billion Prime Money Market Fund after investors rushed to withdraw their investments.

    More than $150 billion has been redeemed from money-market funds so far this week, according to iMoneyNet, a fund tracker based in Westborough, Mass.

    The Treasury Department is now guaranteeing money-market funds and has the authority to use as much as $50 billion to provide backing for them. In addition, the U.S. Federal Reserve said it would extend loans to banks that were facing large-scale redemptions of their money-market funds.

    Still, prudence will likely govern the decisions of corporate treasurers for some time to come.

    Drug maker Endo Pharmaceuticals Holdings Inc. (ENDP) says it takes a conservative approach to cash management that predates the recent flare-up in the financial crisis. The Chadds Ford, Penn.-based company has much of its $565.2 million in cash is "largely invest[ed] in U.S. Treasury bills," said Blaine Davis, an investor relations officer.

    -By Andrew Morse, Dow Jones Newswires; 415-439-6402;

    (Jon Kamp and Peter Loftus contributed to this report.)

    (END) Dow Jones Newswires

    09-19-08 1611ET

    Copyright (c) 2008 Dow Jones & Company, Inc.

  2. Related article:

    Putnam Investments Closes $12B Money-Market Fund

    By Binyamin Appelbaum
    Washington Post Staff Writer
    Thursday, September 18, 2008; 3:17 PM

    Putnam Investments has closed a $12.3 billion money-market fund to limit losses to its investors, the large mutual fund company said today. The highly unusual announcement is the latest sign that tremendous financial pressures are now threatening even some of the safest kinds of investments.

    The Prime Money Market Fund was open only to institutional investors. Putnam said in a statement that its board decided to close the fund last night after receiving a large number of redemption requests. The company said it could honor those requests only by selling assets at a loss, reducing the value of the remaining shares.

    Putnam said it decided instead to liquidate the fund and spread any losses evenly among all the investors. "We wanted to treat all shareholders equally," said spokeswoman Laura McNamara. She said it was "premature" to discuss how much of a loss, if any, shareholders will incur.

    The Putnam action is likely to increase concern among investors about the safety of investments in money-market funds, traditionally viewed as basically comparable to bank accounts. Investors pulled an estimated $80 billion from money-market funds yesterday, according to Crane Data, which tracks the industry. That in turn limits the capital available to banks and other companies that regularly borrow from money-market funds.

    In addition, Moody's warned today it might downgrade 13 money-market funds managed by a subsidiary of Lehman Brothers, indicating increased concern about their safety. The bond rating agency noted increased uncertainty about the ability of the parent company to cover any losses at the funds.

    McNamara said that the Putnam fund's trustees were meeting today to discuss a liquidation process and that payouts to shareholders could include some of the securities now held by the fund. That might avoid the need to liquidate those securities at fire-sale prices.

    The action by Putnam comes two days after one of the nation's largest money-market funds announced it was imposing a 3 percent loss on its investors. It was only the second time in history that a money-market fund imposed losses on its investors.

    At least 20 other fund managers have covered losses at money-market funds to avoid imposing losses on their investors. After the Reserve failed to do so, industry observers said they expected larger companies would continue to cover any losses.

    Putnam is one of those large companies, and its decision to liquidate is bound to raise new concerns about the security of other money-market mutual funds. These funds are distinct from money-market accounts at banks, which are federally insured.

    Virtually all money-market funds have historically enjoyed the highest possible ratings from Moody's and Standard & Poor's. Yesterday, S&P downgraded several money-market funds managed by the Reserve after its Primary Fund imposed a loss on shareholders.

  3. I've seen this with many articles on CNN and CNN money. There have bee so many times I've gone back to an article at CNN and it's gone. No amount of searching turns it up.

    Most definitely make local copies of anything on CNN. I just save them as a PDF or do a web archive from Safari.

  4. i found a google cache by using what i call a non-intuitive or tangential search string (in this case "corporate-treasurers inurl:cnn inuurl:newsfeeds" (
    the original article came up and i clicked on the cached. from the fact that i got the article i conclude that google caches redundantly according to the pathway from which they arrive at the article; also that the spider spiders more common pathways (and articles) more often, scrubbing the cache if the article is scrubbed. or something. here's the url of the article:
    and thanks to all of us for all we do to defeat the ministry of truth!