You remember September 2008 vividly. Lehman Brothers collapses. The Reserve Primary Fund finds itself holding the bag on a lot of Lehman assets, which plunge suddenly in value. The nation’s oldest money fund “breaks the buck,’’ telling investors it can’t pay out $1 for each share they hold for which they had been promised would always be worth $1.
There’s a run on money funds. SEC chairman Mary L. Schapiro later puts the run at $300 billion and, after the first set of reforms, says the federal government can never again step in guarantee assets held in the funds.