Comercia freezing accounts of venture-backed start-ups

VentureBeat is reporting that Comerica Bank is freezing the money market accounts of venture-backed companies. They could not get Comerica to deny this and instead quoted a bank spokesperson as saying ““At Comerica, we are working with customers on a case-by-case basis to assist them with their liquidity needs.”. The problem can apparently be traced to the auction-rate note market that has been facing a serious disruption. “Those notes make up a $330 billion market that recently came to a virtual standstill. They represent debt from city governments and other tax-exempt organizations, and the rates are reset at auctions every week” according to the New York Times, and VentureBeat noted that in mid-February, the demand for those notes “completely dried up”. They believe this is one of the first examples of the subprime burst directly affecting venture-backed start-ups.