Investment News writes "The buck stops fear? Treasury-wary advisers should consider cash". It says, "As the Washington debt limit spectacle grinds on, financial advisers might want to consider their options with regard to cash management if for no other reason than peace of mind. Granted, in the event of a full-blown default by the U.S. Treasury, "we are all in a world of hurt," according to Eric Lansky, director at StoneCastle Partners LLC, a cash management firm. However, with a full-scale default seen as a remote scenario, Mr. Lansky said investors could be protected from a more plausible short-term default or downgrade of U.S. debt by seeking the shelter of Federal Deposit Insurance Corp.-backed cash investments." The article also quotes Peter Crane, president and chief executive of Crane Data LLC, "Default [by the U.S. government] is a threat to money funds and the entire banking system.... Without the backing of the U.S. Treasury [in the event of a full scale default], the FDIC insurance fund would last about 45 minutes. FDIC insurance calms people's nerves because they assume there's a government guarantee behind it, but I don't think anyone would get all warm and fuzzy about FDIC if it weren't backed by the Treasury." See also yesterday's Wall Street Journal piece "Money Funds Dial Down Risk".
