Help is on the way for some money market investors: TD Ameritrade says it's going to put up $50 billion to make sure its brokerage customers who have money in the Reserve Primary Fund suffer no losses. A drop in the fund's net asset value last week left investors with less than $1 for every dollar invested. Meanwhile, Ameriprise Financial says it'll backstop losses with up to $33 million. The firms said those amounts represent the cost of making up the 3 cents per share their customers stand to lose (the fund's net asset value dropped to 97 cents a share last week).
TD Ameritrade reports that less than 0.5 percent of customers' holdings are in the fund (some of those clients posted in this blog's comments section this week). The firm also says that once the Reserve processes the TD Ameritrade redemption request, customers will see their cash return to their accounts. The Reserve halted redemptions on September 16.
Today, Goodyear announced that it's tapping a $600 million credit line because more than half of its cash investments are tied up in the Reserve Primary. The company has been trying to pull its $360 million out, but as of yet the Reserve hasn't acted on the request "because federal regulators have called for an orderly disposition of the fund's securities," reports the Wall Street Journal.
In related news, Ameriprise is suing the Reserve for allegedly tipping off big clients about its troubles.