Money market accounts and withdrawal requests

Many of my friends and family didn't believe me when I said financial institutions, under law, could delay customer withdrawal requests up to seven business days.  In other words, what you and I think are immediately liquid accounts are anything but.  Still don't believe me?  Here's your proof:

http://www.cftc.gov/tm/finseginterp_9.htm

The Division's position is based upon the fact that the Committee has imposed a reservation of notice requirement for the MMDA, such that banks and savings and loan institutions must reserve the right to require seven days prior notice of withdrawals or transfers from any MMDA [money market deposit account].

The Committee determined to impose the reservation of notice requirement even though the Committee recognized that banks and savings and loan institutions would exercise their rights under such a requirement infrequently. The Division is concerned that such a right is likely to be exercised when there is a significant market disruption. In such circumstances, the inability of an FCM to obtain immediate access to the funds in an MMDA could magnify the impact of any market disruption and cause additional repercussions.

A conversation with Art Cashin

Art Cashin recaps "breaking the buck" of money market funds, and how we were all frozen out, post-Lehman collapse.

http://classic.cnbc.com/id/33432400/page/3/

There were reports today that they were considering would they need martial law if banks failed and people took to the streets. So they were as terrified as everybody else. I think they never realized what Lehman would do, not only with the money market funds, but when the money market funds looked like they were freezing up and everybody got terrified, they stopped dealing in commercial paper.

Money markets are the major source of liquidity in commercial paper. Not to bore the viewers, but commercial paper is a very liquid, short-term borrowing thing that IBM uses, that Proctor and Gamble uses. I mean, we're not talking about financials here. We're talking about transferring from Wall Street to Main Street. These people are used to borrowing for two or three weeks. And suddenly, they were frozen out. There were no assets. And that, I think, is what terrified both Bernanke and Paulson. And they had to guarantee to try to re-liquefy.