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On the Brink: Inside the Race to Stop the Collapse of the Global Financial SystemIn turn, the money funds pulled back on their funding of the many large financial institutions that depended on them for a big portion of their liquidity needs. It was a development that we were not well equipped to address. We stepped in to guarantee the money market funds to prevent the crisis from getting worse, but the fundamental problems in the industryБЂ™s business model remain. Many of these funds charge investors very low fees, often as little as 5 basis pointsБЂ”or 0.05 percentБЂ”while offering interest rates that are higher than those available on insured bank deposits or on Treasury bills. If something looks too good to be true, it almost always is. In this case, it was the money fund industryБЂ™s soft or implicit guarantee of immediate liquidity and full return of principal with a premium yield and a low fee. Many, if not most, of these funds simply did not have the financial capacity to maintain their liquidity or a 100 percent preservation of capital for their investors in the midst of the credit crisis ...» | Код для вставки книги в блог HTML
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