Dozens of money funds had to be propped up during financial crisis, Moody’s says

Moody’s: Crisis left money funds near brink

BOSTON — At least three dozen money-market mutual funds were at risk of failing during the financial crisis, Moody’s Investors Service says, in addition to the one that completely collapsed.

Tuesday’s report shows how shaky the nearly $3 trillion money fund industry was after Lehman Brothers’ 2008 implosion.

Money funds are designed to be convenient places to park cash and safely earn a modest return. But clients pulled out en masse after the $64 billion Reserve Primary Fund couldn’t return a dollar for every buck investors put in, due to a soured Lehman Brothers investment.

Moody’s says 36 other U.S. money funds were at risk of ‘breaking the buck.’ But investors avoided losses after at least 20 fund companies spent billions to prop up their funds.