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Schwab, First Republic, Zion, bank loan and preferred funds bloodbath

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Comments

  • Morning @msf
    I'm on the go this morning (away from the house,not enough time) and not familiar with Schwab MMFT's. I will presume that the outflows you mention are due to the non-Treasury holdings being a larger percentage vs their other MMKT's that are 'more' Treasury oriented, yes?
    Thank you.
  • I will presume that the outflows you mention are due to the non-Treasury holdings being a larger percentage vs their other MMKT's that are 'more' Treasury oriented, yes?

    Yup. Flight to quality. Personally I don't see a direct connection between banks being at risk (though not failing, and in fact being propped up by the FDIC) and corporate defaults substantial enough that prime funds break a buck.

    Seems more like herd mentality to me - the same behavioral phenomenon that leads to runs on solvent banks that in turn can cause the failures that people are afraid of.

    See prisoner's dilemma.
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