In a year of spectacular losses in mutual funds, few fund bailouts have caused more of a sat than the $67.9 million BankAmerica Corp. injected into two of its money market funds. In congressional testimony earlier this month, BankAmerica risk-management executive Lewis Teel explained what happened. Excerpts follow.
At various points from 1992 to October 1993, the [Pacific Horizon] Prime and Government Funds acquired variable and floating rate notes issued by U.S. government agencies. These notes met all objective purchase criteria and were permissible investments. The notes did not amount to more than 10% of each of the fund's respective portfolios at the time they were purchased.