You want your money....

[sundaynfl]

French Bank BNP Paribas, second largest bank in Europe, announced it has temporarily halted withdrawals in three of its mutual funds that have exposure to US subprime credit. This after the head of the bank said that they had minimal exposure on Monday. As you can imagine, investors like you and I, who are told that their own funds are not available for withdrawal, would be quite worried. The ECB opened up it's lending window with 130.1 billion dollars for banks to borrow, providing liquidity for the market.

 

NY Times

 

"The European Central Bank lent 94.8 billion euros, or $130.1 billion, to meet banks’ needs after demand for cash in the European money markets drove interest rates higher. The central bank, taking such emergency action for the first time since just after the terrorist attacks of Sept. 11, 2001, said it would provide unlimited amounts at 4 percent, its current benchmark rate."

 

Now it seems that people who shouldn't get hurt by the credit crunch are getting hurt... unlike the Bear Stearns debacle.

[H8tank]

Thank goodness I don't have any money!

[muck]

I believe the three BNP Paribas funds that are referenced here are not mutual funds, but are private investment funds with a total of $2.1B in investor capital ... and these funds have less than 1% of their assets in hard-to-value sub-prime-related securities (i.e., less than $21 million).

 

And, halting redemptions isn't necessarily the same thing as losing money. All it really means is that "we're not giving you your money until we're really sure how much to give you" ... because if they give too much, the remaining investors can sue for breach of fiduciary responsibility (among other things) and if they don't give enough, the exiting investors can sue for the same reasons.

Edited August 9, 2007 by muck