money fund freeze has drawn the attention of the Gray Lady and that attention may scare more investors. The New York Times' Diana Henriques compares
the freezing of the Reserve's money funds to President Franklin Roosevelt's
"bank holiday" at the outset of his presidency in 1933 -- a comparison that may not be fair but is also sure to bring up frightening connotations for at least a few readers.
For the full story on the the death of the Reserve and its Primary Fund, see MFWire's timeline.
Henriques writes that "The crisis that hit last month at the Reserve Fund, the nation’s oldest money market fund, has frozen hundreds of thousands of customer accounts for more than six weeks — with no sure end in sight."
The article documents the angst felt by somewhere between 400,000 and one million "real people." Of that number Henriques found retired industrial photographer Sherry Bryan as well as Sandra and Lawton Dews "who don't sleep at all" in the month and a half since the Reserve fund broke the buck and cut access $250,000 of their retirement assets. Both Bryan and the Dews are represented by Girard Gibbs, a law firm in San Francisco, in a suit filed against The Reserve.
John Oakes, a retired engineer in Austin, Texas, was counting on the fund to pay his mother's $20,000 nursing home bill: “They say we may get some money this week, but we don’t know if we’ll get 100 percent, 90 percent or 30 percent.”
Getting the final word is research scientist Michael Brunner of Columbus, New Jersey who was an initial investor in the Reserve in 1970: "But after 30 years, one doesn’t think it will go bad," he told the paper.
"People talk about this like it’s something that happened," he said. "But this isn't something that ‘happened.’ This is still happening. I still don’t have my money and I still don’t know what’s going to happen to it."
Besides offering testimonial witnesses, the NYTimes
coverage also highlights The Reserves failure to maintain contact with investors and the outside world, a failing that is especially grave in a crisis.
Initially, the company simply announced that it would delay redemptions from the Primary Fund for up to seven days, as allowed by law. Customers were somewhat reassured, but anyone trying to get additional information was met with busy phone lines and unanswered e-mail.
The news occasionally posted on the fund’s Web site got steadily worse. On Sept. 18, investors in a host of other Reserve money funds learned that their money would be tied up for as long as a week; that delay later became open-ended. On Sept. 19, the fund delayed redemptions from both the Primary Fund and the US Government Fund indefinitely.
Several requests for comment from management of the Reserve Fund have been declined. “I have no confidence at all in what it says,” said Mrs. Dews.
All that can be added is: Calling all Bents, pick up your phones!
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