Word: marketed
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Dates: during 1980-1989
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...upheaval in the savings business has been most dramatically seen in the recent explosive transfer of money from banks and S and Ls into the trendy money market funds. During the month prior to Carter's new measures, $4 billion came out of mattresses, cookie jars and savings accounts and went into money market accounts...
...have been forced to borrow increasingly large amounts by selling certificates of deposit, usually in denominations of more than $100,000, at interest rates high enough to attract buyers. Not surprisingly, some of the biggest customers for the certificates have turned out to be none other than the money market funds. In sum, the more the passbook deposits in the banks have shrunk, the fatter have grown the money market funds, and the higher has climbed the cost to the banks of borrowing the money back again to stay in business...
...effort to ease the pain, the Federal Reserve in June 1978 allowed banks to begin offering any depositor willing to part with a minimum of $10,000 for six months an opportunity to earn a rate of return more or less equal to the money market funds. The new superrate was keyed to the interest that the U.S. Treasury must pay for its weekly sales of six-month bills to finance federal debt. This has helped slow the outflow of deposits, but in the process has forced up the cost of depositor funds to higher levels than ever...
...beginning to dry up. As a result, more and more thrifts are finding it all but impossible to pay the double-digit interest rates needed to attract deposits. Asserts Saul Klaman, president of the National Association of Mutual Savings Banks:' "It's this simple: the money market funds have been a disaster for our industry." Some normally antiregulation financiers are now demanding controls on the money market funds similar to the ones banks face. Adds Klaman: "If you look like a duck and waddle like a duck, you ought to be regulated like a duck...
Largely in response to such protestations, the Federal Reserve announced, as part of the new Carter program, that all money market funds must set aside 15% of any future deposits in non-interest bearing accounts with the Federal Reserve. Since money market funds cannot then invest this cash in bank certificates of deposit or any other high-yielding accounts, the effect for fund shareholders would be a modest reduction in the net interest they could earn...