In practice, banks guarantee the credit quality of the Money Market Funds they sponsor. This guarantee should be reflected when computing their capital ratios.
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Bank of America Corp. and Federated Investors Inc. disclosed their most recent holdings and pledged to protect investors after the $3.45 trillion money-market fund industry was jolted by its first loss in 14 years.
As U.S. stocks fell 4.7 percent for the second time in three days, money-fund managers said yesterday they will commit capital to offset any investment losses they incur. They sought to calm investors after Reserve Primary, the nation’s oldest money fund, did what no competitor had done since 1994 — allow its net asset value to fall below $1 a share, or break the buck.