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ERIC Number: EJ815439
Record Type: Journal
Publication Date: 2008-Oct-10
Pages: 1
Abstractor: ERIC
Reference Count: 0
ISSN: ISSN-0009-5982
Bank Freeze Leaves Hundreds of Colleges Cut off from Short-Term Funds
Field, Kelly
Chronicle of Higher Education, v55 n7 pA20 Oct 2008
This article reports on Wachovia Bank's move in freezing the accounts of nearly 1,000 colleges that invest through Commonfund, leaving them unable to reach billions of dollars they depend on for salaries, construction, and debt payments. The move could cause other ripples, as Moody's Investors Service announced it would review the credit impact of the bank's decision on the many rated institutions participating in Wachovia's short-term investment fund. The freeze has some colleges worried that they won't be able to make payroll this period, said Verne O. Sedlacek, president and chief executive of Commonfund, which manages investments for nonprofit institutions and directed colleges' money to the Wachovia fund. A spokeswoman for Wachovia said the bank has restricted withdrawals to "ensure an orderly liquidation of the fund." Without a freeze, some colleges might have withdrawn all their money at once, leaving the fund without enough cash to cover the remaining investors. The fund, which invests in short-term securities, has become less liquid in recent months because of a credit crunch that has made it difficult for banks to sell securities backed by mortgages and other loans.
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Publication Type: Journal Articles; Reports - Descriptive
Education Level: Higher Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A