donahue is the president, ceo and director of federated invstors. mr. bradley fox is vice president and treasurer of safeway it and finally we have with us professor david scharfstein, president of finance and banking at harvard business school. because we are running short on time, we are going to move right to questions of our second panel. each of our witnesses statements will be submitted for the record. i will ask the clerk to put five minutes on the clock for each members questions. first, professor scharfstein, please describe the causes of the run on money funds on september 2008 and the reasons why the 2010 reforms you recommend further reforms to preserve financial stability. >> thank you, senator. the run on the money funds in september 2008 was triggered by the failure of lehman brothers. actually, in the months, india actually leading up to the failure of lehman brothers, recent research shows that not just the reserve primary fund, but a whole host of other funds were, took the opportunity to increase risk in their portfolios. there were stresses in those markets at the time, increase yields on various forms of paper that was issued by fin

donahue as the president, ceo and director of federated investors inc.. bradley fox mr. is vice president and treasurer of safeway. and professor davidarfstein, president of finance and banking at half the harvard business school. because we are running short on time, we are going to move right to questions of our second panel. each of our witnesses statements will be submitted for the record. i will ask five minutes on the clock. professor, please describe the causes of the run on money funds in september 20 -- 2008 and the reason why you recommend for the reforms for financial stability. >> thank you. the run on the money funds in september 2008 was triggered by the failure of lehman brothers. in the year leading up to the failure, recent research shows that not just their reserve primary fund but a whole host of other funds took the opportunity to increase risk in their portfolios. there were and stresses in those markets at the time, increased yields on various forms of paper that was issued by financial institutions and those funds increased. quite a few increase the risk of their portfolios. there was a lot of exposure to risky