Comments on: Is Your Money Market Safe?

By: moom

moom — Tue, 27 Nov 2007 21:53:41 +0000

Anon – the whole point of this article is that there have been some losses in some money market funds in recent months…

By: Mrs. Micah

Mrs. Micah — Sat, 17 Nov 2007 02:23:29 +0000

Actually, it doesn’t cover money market _funds_–which are different from money market _accounts_. It’s easy to get them confused, I did until I had to memorize them for a personal finance test.

The FDIC site you link to says it right near the top:

“…Banks also may offer what is called a money market deposit account, which earns interest at a rate set by the bank and usually limits the customer to a certain number of transactions within a stated time period. All of these types of accounts generally are insured by the FDIC up to the legal limit of $100,000 and sometimes even more for special kinds of accounts or ownership categories.”

What you say is quite applicable to funds, however. FDIC doesn’t cover them, though there are some safeguards if the company offering them totally collapses, I believe. It’s another organization that does it, something with “S” and “P” in its acronym.

By: Anon

Anon — Mon, 12 Nov 2007 19:31:49 +0000

Money market deposit accounts (MMDAs) are in fact FDIC insured. It says this in the very fdic.gov link you posted.

Money market mutual funds (MMMFs) are something else entirely, and are not FDIC insured. They are, however, highly regulated, and no one has ever lost money in one.

Also, ING Direct is a MMDA.

By: The Carnival Of Personal Finance (#126) | Million Dollar Journey

The Carnival Of Personal Finance (#126) | Million Dollar Journey — Mon, 12 Nov 2007 07:33:13 +0000

[...] Is Your Money Market Safe? by Living off Dividends [...]

By: drgoodie

drgoodie — Mon, 05 Nov 2007 16:58:04 +0000

Do a search and read the particulars – don’t rely on
someone’s posting – including this one.
The depositor is insured for $100k per “member” institution, not per account within one “member” institution, and not at all in non-member
institutions with some exceptions. Although I don’t understand all the particulars, I do know the
insurance is not “per account” as stated above.
This is confirmed by just one excerpt from one
online source quoted below. We should do
our own research to understand the details, and we
need to understand how rules have been changed and
what changes have been proposed.

excerpt from one search result -
FDIC insurance covers “deposit accounts”:

Demand deposit accounts (aka “checking accounts”), Negotiable Order of Withdrawal accounts, i.e., NOW accounts (checking accounts that earn interest), and money market deposit accounts, also called MMDAs (savings accounts that allow a limited number of checks to be written each month.)
Savings accounts that can be added to or withdrawn from at any time.
“Money market” accounts, essentially high-interest savings accounts (the name is similar to “money market funds” which are not insured).
Certificates of deposit (CDs), which generally require funds to be kept in the account for a set period.
Outstanding Cashier’s Checks, Interest Checks, and other negotiable instruments drawn on the accounts of the bank.
Accounts at different banks are insured separately. One person could keep $100,000 in accounts at two separate banks and be insured for a total of $200,000. Also, accounts in different ownerships (such as beneficial ownership, trusts, and joint accounts) can be considered separately for the $100,000 insurance limit. The Federal Deposit Insurance Reform Act raised the amount of insurance for an Individual Retirement Account to $250,000.