Fidelity/Schwab Cash Reserves Concerns

I know we are all busier than normal this time of year but I am a bit concerned when I read about money market funds with exposure problems to troubled assets.
This message is directed to all money market investors and particularly those in the Fidelity Cash Reserves and/or Schwab Cash Reserves:

CURRENT SITUATION
Fidelity Cash Reserves, the largest retail money fund and Schwab Cash Reserves are holding several billion dollars in securities issued by Spanish and Italian banks.  While the banks remain highly rated, their stock prices have fallen 20-30% in November.  This is due to the ongoing uncertainty of the health of European banks.  In 2008, the collapse of Lehman Brothers caused the Reserve Primary Fund, one of the world's largest money markets, to break the buck, causing a run on the fund and a global slowdown.

POSSIBLE OUTCOMES
As a result of 2008, regulators have placed higher quality and liquidity restrictions on money market funds.  The problem is that these new rules haven't been tested under real market conditions and may be somewhat suspect in a market panic.  A review of some of the problems which may cause a market squeeze include:

• If money market investors get nervous and sell out, they could force money markets to sell assets, putting downward pressure on prices.
• If investors leave the money market sector, this could cause redemption problems for all investors in many funds.
  
• If European banks fail to attract new investors, they could face liquidity shortages

COURSE OF ACTION
Money market funds are designed to provide a very high degree of safety of principal and liquidity.  Any deviation from this mandate should cause an immediate review of your holdings.  As recent history has shown, one troubled fund can have a major impact on global liquidity and stability.  My recommendations include:

1. If Fidelity is your 401k provider, you should examine the holdings of your money market fund even if different than Fidelity Cash Reserves to determine your exposure to European banks.  Most money market funds will have some European exposure.
   
2. Review the money market fund holdings in your brokerage statements.  Determine how much in European debt, CDs, variable notes, etc. is held in the fund. 
3. If you are unsure, do not understand what a money fund is, or cannot identify your money market fund, ask for help! 
   
4. If you are concerned about Safety in your retirement funds and investments, now is a good time for a thorough review.  The risk profile of your safe assets may have changed.

Any questions or concerns, please feel free to ask.
Chris