Federated to Manage Investment Pool

BlackRock split the reopened pool into two funds. One fund remained open to local governments, but the other, containing the worrisome mortgage-related securities that led to the run, was closed off.

Before the run, the pool had about $25 billion in investments. On Tuesday, the open part of the pool had just under $8.9 billion in assets, and SBA interim director Bob Milligan said the fund has stabilized, with local governments putting more money into the pool on most days than they are taking out.

"We've had positive cash flows, as the rule rather than the exception," said Milligan. "We continue to improve liquidity. All in all, things have settled down."

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