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 FINANCIAL CRISIS INQUIRY COMMISSION REPORT

as Bank of America, US Bancorp, and SunTrust, purchased SIV assets from their
money market funds. 
Similar dramas played out in the less-regulated realm of the money market sector
known as enhanced cash funds. These funds serve not retail investors but rather
“qualified purchasers,” which may include wealthy investors who invest  million
or more. Enhanced cash funds fall outside most SEC regulations and disclosure re-
quirements. Because they have much higher investment thresholds than retail funds,
and because they face less regulation, investors expect somewhat riskier investing
and higher returns. Nonetheless, these funds also aim to maintain a  net asset
value.
As the market turned, some of these funds did break the buck, while the sponsors
of others stepped in to support their value. The  billion GE Asset Management
Trust Enhanced Cash Trust, a GE-sponsored fund that managed GE’s own pension
and employee benefit assets, ran aground in the summer; it had  of its assets in
mortgage-backed securities. When the fund reportedly lost  million and closed

in November , investors redeemed their interests at .. Bank of America
supported its Strategic Cash Portfolio—the nation’s largest enhanced cash fund, with
 billion in assets at its peak—after one of that fund’s largest investors withdrew
 billion in November . 
An interesting case study is provided by the meteoric rise and decline of the
Credit Suisse Institutional Money Market Prime Fund. The fund sought to attract in-
vestors through Internet-based trading platforms called “portals,” which supplied an
estimated  billion to money market funds and other funds. Investors used these
portals to quickly move their cash to the highest-yielding fund. Posting a higher re-
turn could attract significant funds: one money market fund manager later compared

the use of portal money to “drink[ing] from a fire hose.” But the money could van-
ish just as quickly. The Credit Suisse fund posted the highest returns in the industry
during the  months before the liquidity crisis, and increased its assets from about
 billion in the summer of  to more than  billion in the summer of . To
deliver those high returns and attract investors, though, it focused on structured fi-
nance products, including CDOs and SIVs such as Cheyne. When investors became
concerned about such assets, they yanked about  billion out of the fund in August
 alone. Credit Suisse, the Swiss bank that sponsored the fund, was forced to bail

it out, purchasing . billion of assets in August. The episode highlights the risks
of money market funds’ relying on “hot money”—that is, institutional investors who
move quickly in and out of funds in search of the highest returns.
The losses on SIVs and other mortgage-tainted investments also battered local
government investment pools across the country, some of which held billions of dol-
lars in these securities. Pooling provides municipalities, school districts, and other
government agencies with economies of scale, investment diversification, and liquid-
ity. In some cases, participation is mandatory.
With  billion in assets, Florida’s local government investment pool was the
largest in the country, and “intended to operate like a highly liquid, low-risk money
market fund, with securities like cash, certificates of deposit, . . . U.S. Treasury bills,