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Friday, November 30, 2007

Montana Fund Withdrawals

by Calculated Risk on 11/30/2007 01:40:00 PM

From MarketWatch: Florida's investment woes spark subprime fears in other states

Florida halted withdrawals from a $15 billion local-government fund on Thursday after concerns over losses related to subprime mortgages prompted investors to pull roughly $10 billion out of the fund in recent weeks.

Other states are experiencing similar problems on a smaller scale.

The Montana Board of Investments, which manages the state's money, has seen $247 million withdrawn by local governments in the past three days from a $2.5 billion money-market-like fund called the Short Term Investment Pool.

"We've had some local government withdrawals in the past few days because of reports about Florida's problems," Carroll South, executive director at the Montana Board of Investments, said in an interview on Thursday.

Rating agency Standard & Poor's warned last month that it could downgrade a $4.8 billion investment pool run by King County, Wash., because of potential subprime exposures.
In addition to potential "bank runs" on these funds, another key concern is if other funds stop investing in asset backed CP - making the credit crunch worse.