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The Money Market Run


Not affiliated with WaMu, or JPMorgan Chase, not an organization, just a burned shareholder seeking compensation.


Tues January 27 2009:

Rep. Paul Kanjorski D-PA, 11th District, Chair of the House Capital Markets Subcommittee, on C-SPAN’s Washington Journal informed us that on Thursday September 18, 2008 US bank money market accounts suffered a system wide electronic bank run that removed $550 billion in the first two hours of the morning. The Federal Reserve responded by pouring $105 billion into the banks immediately before determining they could not slow the runs. If allowed to continue at the speed it was moving by the end of the day $5.5 trillion dollars would have left the banking system and this would have caused a collapse of the US and World economies, and logically the collapse of many governments, probably even the US government. The funds stopped the panic by closing many funds for the day and the Federal Reserve announced a guarantee of Money Market accounts up to $250,000.

People are differing on the amounts involved, but regardless this means WaMu was simply one of many banks experiencing a bank run, and only WaMu was unjustifiably targeted for a seizure. WaMu's "run" of $16 billion over ten days even seems slow and small in comparison. No word on what the drawdowns were at the other banks.

This is the C-SPAN video of Rep. Paul Kanjorski. He starts explaining at 2:09 into the video.
News stories from the time allude to what has happened, but do not tell the whole story.
First a stressed and nervous video from New York Times Senior financial writer, Diana Henriques, explaining the governments action, September 19th, 2008.
Money Market Breaks The Buck, Freezes Redemptions (09/17/08)
Putnam Investments Closes $15B Money-Market Fund (09/18/08)
Treasuries Decline on Possible New Agency Creation (Correct) (09/18/08)
Washington Moves To Shore Up Money Market Funds (09/19/08)
Rushing to save money-market funds (09/19/08)
Americans' Money Safer Today, as Govt. Guarantees Money Market Funds (09/19/08)
Central banks open taps (09/19/08)
Fed Money-Market Moves May Carry Big Risk (09/19/08)
Treasury to Guarantee Money Market Funds (09/19/08)
Almost Armageddon (09/21/08)
Fed keeps banks afloat as money market crisis deepens (09/25/08)
The One Jaw Dropping Video that Every Fool Must See (02/09/09)
How the World Almost Came to an End on September 18, 2008 (02/10/09)
Inside the Meltdown: Who Was Withdrawing From Money Market Funds On September 16-18, 2008 and Why? (02/17/09)
In his February 24th 2009 testimony to Congress, Federal Reserve Chairman Ben Bernanke said this about it, "Losses at a prominent money market mutual fund prompted investors, who had traditionally considered money market mutual funds to be virtually risk-free, to withdraw large amounts from such funds. The resulting outflows threatened the stability of short-term funding markets, particularly the commercial paper market, upon which corporations rely heavily for their short-term borrowing needs."
source: Text of Bernanke's testimony to the Senate Banking Committee February 24, 2009.




The money market run was $550 billion. This amount was all the money market funds, mutual funds, and banks that offered these accounts. WaMu was the sixth largest bank. Using the amount of WaMu's total rush of withdrawals before the seizure, of $16.7 billion, which includes days not considered part of the money market run, WaMu was 3% of the money market run. If the sixth largest bank was only 3% of the run, who was the other 97%, and what was their financial stability at the time. WaMu was the only bank seized as a result of the run. That WaMu and its investors are destroyed for 3% of a $550 billion dollar run is not right. WaMu was singled out and targeted.




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