Defaults

Defaults on high quality commercial paper are rare, and cause concern when they occur.[7] Notable examples include:

    * On June 21, 1970, Penn Central defaulted on a debt of $77.1 million

          The Federal Reserve intervened and cut Penn Central's bond rating from BBB to Bb.[8] This placed a substantial burden on clients of the issuing dealer for Penn Central’s commercial paper, Goldman Sachs.

    * On January 31, 1997, Mercury Finance, a major automotive lender, defaulted on a debt of $17 million, rising to $315 million.

          Effects were small, partly because default occurred during a robust economy.[7]

    * On September 15, 2008, Lehman Brothers caused two money funds to break the buck, and led to Fed intervention in money market funds.