Just so there’s no confusion, Breakingviews is absolutely correct in saying you should ignore Tim Geithner when he says the money market fund guarantee is being pulled back.
And you should also ignore the FDIC when it talks about pulling back on various guarantees for bank debt.
Actually, until there’s wholesale reform of the financial industry, ou should ignore any time any regulator talks about removing a guarantee.
Seeing as the bailout and banking crisis intervention worked so well last year, all thse programs would be resintated immediately if things got scary again. Can you imagine any scenario in which, under a repeat of the same circumstances, Geithner and Bernanke said: Nah, this time we’ll let the run on money market funds happen unabated? Or: This time we’ll let Citigroup fail.
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