Will PayPal money market fund break the buck?
Bob Morris @ Dec 4th 2007 00:25 - Category: Credit crisis
5.5% of the $1.63 billion PayPal fund is in “illiquid assets.” Yup, more SIVs.
The rot continues to spread everywhere.
Bonus points for those of you can describe which Circle of Hell the investment manager at PayPal will be plunged into once the lynch mob is done with him.
4 Comments »
4 Responses to “Will PayPal money market fund break the buck?”
Leave a Reply
Comments subject to deletion at whim of capricious webmaster. Disagreements are ok. Flames, trolls, and right-wing attacks are not. If your comment doesn't appear immediately, then moderation is on, thus there's no need to re-send it.
(However sometimes the anti-spam programs here go awry. Email us if your comments seem to vanish into the void.)
DJ on 04 Dec 2007 at 10:24 am #
A couple of observations: First, Paypal is currently paying 4.7% on deposits, so the shortfall equates to 14 months interest expense for them. They can’t drop rates significantly without causing a run on their fund, but this does not seem to be an insurmountable shortfall.
Second, Paypal is not FDIC insured, so if the fund does crash, the shortfall won’t get covered by the fed.
Bob Morris on 04 Dec 2007 at 3:31 pm #
eBay, their parent corporation, would undoubtedly bail out the fund if needed. They wouldn’t really have any other choice.
Larry on 04 Dec 2007 at 11:02 pm #
A lot of non profits use pay pal to collect money and this puts them in jeopardy as well.
CarlosX on 08 Jan 2008 at 10:29 pm #
If paypal goes under there is no FDIC insurance to bail you out. At least with a certificate of deposit from a bank CD you are covered up to $100,000.