Florida officials voted to halt withdrawals from a $27 billion local government fund Thursday to stop a run that's drained nearly half of the fund's assets. The run has been fueled by fears that the Local Government Investment Pool -- used as a sort of interest-bearing savings account by local governments and schools -- has too much exposure to risky securities backed by subprime mortgages and corporate debt. Despite reassurances from the fund's managers that its investments are sound, it has dwindled from $27 billion at the beginning of the month to $15 billion. Money managers pulled $3.5 billion from the fund on Thursday alone, before the State Board of Administration voted to suspend all withdrawals, Bloomberg News reported. The board will meet again Dec. 4 to consider whether the fund will resume processing deposits and withdrawals, and preventative measures such as credit protection for $1.5 billion of downgraded and defaulted holdings. The board issued a report this ...
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