Treasury Announces Guaranty Program for Money Market Funds (hp-1147, September 19, 2008)

Claims Supported by This Source

1. On September 19, 2008, the Treasury Department announced a temporary guarantee program for the U.S. MMF industry. It would insure the holdings of publicly offered eligible MMFs (both retail and institutional) that chose to participate by paying a fee, for one year.
2. The President authorized the use of up to $50 billion of the assets of the Exchange Stabilization Fund (ESF, established under the Gold Reserve Act of 1934).
3. Rationale: Concerns that MMF net asset values could fall below $1 intensified turmoil in global financial markets, leading to sharp increases in short-term interest and funding rates, and volatility in foreign exchange markets. Maintaining the $1 NAV is crucial for investor confidence.

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