One of the largest money market funds has frozen redemptions for seven days as the net asset value of its shares falls below $1.
THIS IS A MONEY MARKET FUND, NOT A MONEY MARKET ACCOUNT. MONEY MARKET FUNDS ARE NOT FDIC INSURED WHILE MONEY MARKET ACCOUNTS ARE.
Marketwatch is reporting that money market fund Primary Fund (RFIXX) is freezing redemptions for seven days starting Tuesday, September 16. Its $785 million holding of Lehman Brothers Holdings debt has been valued at zero. As of 4 p.m., the value of the fund's share is 97 cents. Presumably, investors who have money in the fund will not be able to withdraw it until the freeze has been lifted. It's unclear what the net asset value will be at that point. In most cases, the parent company of the fund injects cash or assets to bring the value back to $1 per share.
We'll share more information as we receive it regarding customer withdrawals.
The Primary Fund is mananged the cryptic sounding The Reserve, a financial company that created the world's first money market fund in 1970.
Clearly, the bankruptcy of Lehman blow a giant hole in the funds value. The drop in its NAV shows one of the ways that Lehman's bankruptcy is rippling through the financial world.
It's important to note that The Primary Fund is a money market fund, not an FDIC money market account. A money market fund can be best thought of as a mutual fund with holdings made up primarily of short-term, high-grade debt obligations and cash-on-hand to ensure liquidity. Money market funds are not covered by the FDIC.
E-Loan is offering a 3.85% APY Savings account with a deposit of $100,000 and monthly deposits of $100.
E-Loan is offering a boost to their normal savings account with the E-Loan Savings Plus Account. The account provides a significant boost to their savings rates. For example:
Savings Plus Savings
$100,000 or greater 3.85% APY 3.01% APY
$50,000 - 99,999.99 3.75% APY 3.01% APY
$25,000 - 49,999.99 3.51% APY 3.01% APY
To quality for these boost rates, customers must make regular monthly deposits into their savings account of at least $100. Any Savings Plus account that does not have a minimum of $100 per month deposit for over 60 days will be converted back to a standard savings account and the rates in effect for a standard savings account will apply. Savings Plus is a Money Market Deposit Account that allows up to six withdrawals per month.
These boost rates are competitive compares to some of the top savings and money market rates although there are other accounts that provide a higher return with a much lower deposit minimum and without requiring customers to make regular deposits.
E-Loan has offered traditionally high CD rates. E-Loan is owned by Banco Popular North America and has a Bauer rating of 3 out of 5 stars. As with any bank, we advise you keep your deposit amount under FDIC limits.
Kerry Killinger, the now ex-CEO of Washington Mutual joins other CEOs from financial services companies in the unemployment line.
The WSJ is reporting that Kerry Killinger is gone as CEO of Washington Mutual. For the savings account and cd holders on BestCashCow, his tenure has been great. In the banks attempt to survive, they have boosted their online savings rate to one of the highest in the country.
But for stockholders, the last year has been horrid.
