Liquidity crisis for colleges?

UPDATE: Attached an AP story on the credit crisis to the bottom of the post.
The credit crunch has the nations colleges and universities worried Wachovia almost collapsed due to a bank run it was reported today by the Charlotte Observer. This sparked a problem for higher education. Wachovia as trustee for the Commonfund, an investment vehicle for many of the nations colleges and universities, limited withdrawals by its customers—meaning, according to the NY Times, that many colleges were left in a panic over whether they could meet expenses like payroll.

Attempts to determine if the University of Alabama System has suffered any liquidity problems were unsuccessful. The UA System and the University itself continued its usual method of not responding to emails seeking information.

The Commonfund responded to an email request seeking a list of Alabama institutions of higher education with an investments in the Commonfund. Unfortunately, the fund declined to release such a list.

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What we do know is the UA System has experienced what most investors have experienced over the last few months—a decline in portfolio value.

A University of Alabama system investment advisor told the board of trustees on Sept. 18 the system’s investments had declined a relatively mild amount (5-7 percent). The advisor called the present crisis the most severe “since the Great Depression.”

We sent emails to the UA System’s finance arm and an email to UA’s president’s office seeking to know if UA or anyone in the system had funds invested in the Commonfund. We also asked if UA utilized Wachovia for any of its operations. We also asked if the University anticipated any liquidity issues. As said earlier, no reply.

So, if UA ever decides to respond to our questions or if any media outlet has better luck getting answers out of the system, then we will post a link. I think the NY Times story raised a legitimate question—do any of Alabama’s institutions of higher learning have exposure to the Commonfund. Unfortunately, it looks like UA won’t answer a blog.

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4 Comments

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  1. 1
    Christopherson

    I’ve already heard from numerous sources that UA will be a lot harder to be accepted into now that they’re at an all time high of 27,000+ students.

    I imagine the economy crisis is only playing into the university officials’ plan.

  2. 2
    TiderInsider

    Chris, that statement will be true whenever the University reaches its goal of 28,000 plus students, which is expected to happen around fall of 2010. But I don’t see the fact that it will be harder to be accepted into to slow down the rapid increasing rate of the student body growth.

  3. 4
    Capstone Report » UA hit by financial crisi

    […] On October 2 we pointed to a possible exposure for UA, UAB and UAH in a liquidity crisis involving W…. We couldn’t get anyone at UA or the UA System to comment on the financial situation. In Monday’s Birmingham News we finally found out the University of Alabama System was heavily exposed to the market crisis. The University of Alabama system was the most directly and immediately affected by market turmoil when, last week, a money market fund managed by Wachovia limited withdrawals. The UA system had $175 million in the Commonfund, which was used by 1,000 colleges nationwide. […]

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