Today's WSJ writes "'Breaking the Buck' Was Close for Many Money Funds". It says, "At least 36 of the 100-largest U.S. prime money-market funds had to be propped up in order to survive the financial crisis, according to a report from Moody's Investors Service.... The report shows how much the money-market world was rocked by the financial crisis. The chaos deepened in September 2008, when Reserve Primary fund's net-asset value dropped to 97 cents a share because of its holdings of battered Lehman Brothers Holdings Inc. debt.... Moody's warned that mutual-fund companies might be less willing to bail out troubled money-market funds next time. With rock-bottom interest rates putting severe pressure on management fees and profit margins, 'there's a lot less at stake' for firms that decide not to rescue imperiled money-market funds, Mr. Shilling said." The Journal quotes J.P. Morgan Asset Management Robert Deutsch, "For most large managers, this is a very good business and has acceptable profit margins even in this market. Most major money-fund managers 'see the long-term opportunity.'" The WSJ piece also adds, "Other money-fund experts said the new rules impose restrictions that should reduce the need for future bailouts." "The willingness to bail funds out likely will be restricted or reduced in the future, but the necessity should be reduced as well," it quotes Peter Crane, president of Crane Data LLC.
