Agave Mountain

Money Market accounts aren't as safe as they used to be.  The SEC voted today to allow Money Markets Funds to suspend redemptions from Money Market accounts:

Zero Hedge discussed a month ago the disastrous prospects of what would happen if the new proposal contemplated by the SEC, which would allow the suspension of redemptions from Money Market Funds, were to pass. Well, in a nearly unanimous vote, Money Market Funds now have the ability to suspend redemptions, courtesy of the SEC's just passed 4-1 vote. This explains the negative rate on bills: at this point, should there be another meltdown, money market investors will not, repeat not, be able to withdraw their money purely on the whim of Mary Schapiro. As the SEC noted: "We understand that suspending redemptions may impose hardships on investors who rely on their ability to redeem shares." Too bad investors' hardships considerations ended up being completely irrelevant. (Source: ZeroHedge).

In layman's terms, a simple example: you have a money market account and faithfully deposit money in it to save for a house, college, or for retirement.  When it comes to take the money out the money out, the bank can say sorry we have suspended redemptions.  We will give you the money... someday.  The question is will someday ever come?

Don't think it can happen?  There have been a rash of hedge funds that have suspended redemptions, only promising that someday they will return the money.  In some cases investors have been locked out well over a year.