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The Financial Crisis in Perspective (Collection) by Mark Zandi, Satyajit Das, John Authers

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Chapter 4. Money Markets Supplant Banks

“We are pleased to report that you, and the markets in general, have embraced the very concept and foundation on which The Reserve was founded, an unwavering discipline focused on protecting your principal, providing daily liquidity and transparency, and all the while boring you into a sound sleep.”

Bruce Bent, chairman of the Reserve Fund in July 2008, weeks before his fund took a loss on bonds issued by Lehman Brothers1

Capital markets took over the core functions of banks, with money market funds even offering checkbooks. This left decisions about lending to the market, with its big swings of sentiment, rather than to banks’ lending officers, and forced banks to find new lines of business. This stoked ...

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