4 Responses to Will PayPal money market fund break the buck?

  1. DJ Tue, Dec 04, 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.

  2. Bob Morris Tue, Dec 04, 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.

  3. Larry Tue, Dec 04, 2007 at 11:02 pm #

    A lot of non profits use pay pal to collect money and this puts them in jeopardy as well.

  4. CarlosX Tue, Jan 08, 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.