Sunday's New York Times features an article written by Diana Henriques entitled, "Money Market Funds Are a Refuge, Right?," which discusses the dramatic growth, unprecedented turmoil and rapidly shifting landscape in the money market mutual fund industry. The Times says, "The amount of cash held in money market funds at the start of 2009 exceeded the money in stock mutual funds for the first time in more than a decade.... Yet 2008 may go down in history as the year that cast doubt on everything American investors thought they knew about money market funds."

It cites The Reserve Primary Fund's "breaking of the buck," delays in redemptions, and myriad lawsuits, saying, "The Reserve Fund battle already involves regulatory investigators, a giant Chinese fund caught in the mess and a federal judge in Minneapolis. The Treasury had to cobble together an ad hoc insurance program to keep the Reserve Fund panic from spreading."

The Times quotes Matthew P. Fink, former chairman of the ICI, "If the Treasury is going to insure these funds, bank-style, we are likely to end up with bank-style regulations." The article adds, "And the money fund industry will be one target of the broader regulatory reform effort that has been promised by the incoming Obama administration. `Regulators may consider requiring greater portfolio diversification and minimum levels of cash as a buffer against a panic, according to Mr. Fink."

Finally, the NYT piece says, "And yet, as the economic storm worsens, money funds still seem the refuge of choice." It says, "Those billions could have flowed into F.D.I.C.-insured bank accounts," and quotes `Peter Crane, "But for decades, people have had the choice between higher yield and absolute safety, and they've chosen yield." But adds the Tiems, "That doesn't mean the money fund industry will not be changed by the fallout from the money fund crisis of 2008."

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