Projo 7 to 7 News Blog

PROVIDENCE -- By Jan. 3, Rhode Island will reel back in $62 million in state investments from a money-market fund frozen in September after economic tailspin spurred investors to flee with billions of dollars, the state general treasurer's office said today.

General Treasurer Frank T. Caprio said in this afternoon's news release that the money will be returned to the state with no financial loss.

Tim Gray, the treasurer's spokesman, said that if the step to get the funds back had not been taken, the investments could potentially lose value over time. He said it would have taken a long time to get the investments back if the state had not acted now.

The state's investments are being secured by putting the fund they are in into the U.S. Treasury's newly created Temporary Guarantee Program for Money Market Funds.

"Through the hard work of my office and a coalition of investors, we were able to secure Rhode Island's assets in an extremely timely manner," Caprio said in the statement.

In October, Caprio said he was seeking to unfreeze the state investments from a fund held by The Reserve company. Since then, the state got an "initial distribution" of $26 million on Nov. 13. The state will receive the remaining $36 million in the beginning of the new year, according to Caprio's office.

On Wednesday, The Reserve entered into a "letter agreement" specifying that if the Reserve is unable to sell its U.S. Government-backed securities by Jan. 3, the Treasury will buy them, at no loss, from The Reserve.

In September, the $7 billion Reserve Co. U.S. Government Fund -- which held many investors' funds, including the state's $62 million -- had all its assets frozen. That happeend after one of its managed funds -- not the one Rhode Island was invested with -- had "broken the buck," meaning fallen below the money-fund industry's $1-a-share standard.

-- projo.com staff writer Michael P. McKinney, with Journal archival reports

 Tags  economy investments

Comments

Roger Goddard said:

Are they getting the money back, with interest?

If they are merely getting their principal back, without any interest, then the statement by Caprio that "the money will be returned to the state with no financial loss" is factually incorrect.

This sounds to me like politician talk; for if the money was being returned with the interest, I would bet that he would specify that.
It's not what they say - it's what they don't say.

So, which is it??

Link | November 21, 2008 5:46 PM
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