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Yeah. But MMFAs can default in ways that aren't guaranteed by the government. The distinction between zero and near zero matters.
by JimboOmega 8y ago
Yeah. But MMFAs can default in ways that aren't guaranteed by the government. The distinction between zero and near zero matters.
- howard941 8y agoThis is an important distinction. When the money marketeer redeems a dollar for less than a dollar it "Breaks the Buck" [0]. Cowen's MM account IIRC was the first one to do that back during the 01 crash. [0] https://www.investopedia.com/terms/b/breaking-the-buck.asp https://www.investopedia.com/terms/b/breaking-the-buck.asp
- xxpor 8y agoThe rules around breaking the buck were significantly changed after 08. Funds can suspend transactions instead now.
- theseatoms 8y agoAs if not letting people out is better than letting them out at a haircut. Need to maintain the illusion of safety I suppose.
- xxpor 8y agoYeah. And the haircut is usually quite small. If I sold my money market for 98 cents on the dollar in a financial crisis I really wouldn't be that upset.