Word: bankes
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Dates: during 1970-1979
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...money funds invest not in stocks or gold or commodities but in high-quality, high-interest bank certificates of deposit, commercial paper, Treasury Bills and other U.S. Government securities...
...institutions looking to park their idle cash. This discrimination has been ended by the swelling number of money funds that have been formed by mutual fund companies and brokerage firms to pool small investors' assets. Since the returns rise along with surging interest rates-and the highest bank prime lending rate rose to 15¼% last week-money market funds are booming. About 75 such funds now handle nearly $40 billion in assets, way up from $11 billion in January and only $4 billion early last year. William Donoghue, publisher of Donoghue's Money Fund Report, estimates that...
People transfer money into funds primarily by selling off stocks and withdrawing deposits from banks and savings and loan associations. This shift away from shares could further damage capital formation; companies ideally tend to raise long-term investment money in the stock and bond markets but go to the money market for short-term borrowings to cover operating expenses. The move out of savings is badly hurting the thrift institutions. They face a tremendous competitive disadvantage and a sharp outflow of funds because the Federal Reserve's Regulation Q prohibits them from paying more than 5½% on passbook...
...outflow from mutual savings banks in September hit $1 billion, a record for that month. Some banks are so pressed for funds that they have stopped making mortgage loans. Federal bank officials are sufficiently worried that they are preparing contingency plans to rescue any troubled institutions...
Fighting a rearguard action against the money funds, many bankers trumpet that their deposits are guaranteed by the Federal Deposit Insurance Corporation, and that money market funds are riskier. There is a slight risk, but since the funds are put largely into top bank and corporate securities, a number of banks and cor porations would have to go broke before the typical money market investor would suffer much loss. He would not even lose, but his yields would go down, if interest rates declined. If they dropped far enough, he might have been wiser to invest in a long-term...