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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: marginmike who wrote (88269)	1/11/2001 12:44:04 PM
From: Joan Osland Graffius	Read Replies (1) \| Respond to of 132070

marginmike, Re: buying from the FED. I have an account at the FED and use my Merrill Lynch account to pay for my purchases i.e. electronic payment. Merrill lynch also receives the note, bond, bill asset in my account and takes care of the payment to me when it matures. I also can sell the asset at any time to Merrill Lynch. Joan

To: marginmike who wrote (88269)	1/11/2001 2:48:05 PM
From: Knighty Tin	Read Replies (2) \| Respond to of 132070

mm, Brokerages DEFINITELY have govt. insurance. The Securites Investors Protection Corporation (SIPC) is a govt. agency and every bit as good as the FDIC. It came about when I.E. Dupont (thanks, Ross Perot) and many other brokers went belly up in the 1970s. I sweated that one, as I had money at Walston and Co., which I.E. Dupont bought just before Ross discovered that you can lose money in the stock biz. A lot of people get confused about the coverage as they cover much more in securities than in cash. So, it is better to be in a money market account than in cash, even if you get interest on the straight cash account. Very few firms do it that way any more for that very reason. Brown & Co. is the only one I know to keep cash out of a money fund. You have to contact your local fed bank for the details. I have never done it and am kind of hazy on the details. I just saw it as an option when I was buying a lot of bonds and bills in the 1980s. Custodial bank accounts do not carry govt. insurance and it would be way too small even if they did. I managed a $10 billion mutual fund housed at State Street and the custodial holdings were not insured. The bank had great security measures, but most of them seemed to be directed against me, which is what I think mutual fund cos. fear: The thieving portfolio manager. Dang! <g> I worried about the CEO of State Street. Who at that firm was going to tell him to buzz off if he wanted a look in the vault? However, the mgt. firm (if we are talking about mutual funds or money funds) has to have insurance, so you are covered in case of their failure, which would happen if the custodian stole the securities. The investor has no worry up to the limits. But fund cos. could someday have a big problem. IMHO, the custodian arrangement, though has never had a failure of any sort, but it is the weak link in the security chain. But you can rest secure in any of your accounts at an SIPC insured institution up to the insured amounts. The limit may be $500,000, but there is no limit on how many times you can collect it from different brokerages/fund cos.