Money Market Mutual Fund (Treasury)

The Money Market Mutual Fund 

A Treasury program to guarantee losses on money market mutual funds as of Sept. 29, 2008. The market valuation for those funds, which the government guarantees, was $3,355.3 billion.

Funding agency and aid type
The funding agency was the US Treasury.

Government guarantees against loss.

Who benefits
Investors in money market mutual funds, money market mutual fund managers.

Background
SIGTARP: “Money Market Mutual Fund (“MMMF”) Program — Total Potential Support: $3.4 Trillion. Treasury initiated the temporary Money Market Mutual Fund (“MMMF”) guarantee program on September 29, 2008. The stated intent was to address temporary dislocations in credit markets by guaranteeing “the share price of any publicly offered eligible money market mutual fund — both retail and institutional — that applies for and pays a fee to participate in the program.” According to Treasury, the program provided “coverage to shareholders for amounts that they held in participating money market funds as of the close of business on September 19, 2008. The guarantee will be triggered if a participating fund’s net asset value falls below $0.995, commonly referred to as breaking the buck.” Originally designed to last for three months, the program has been renewed and extended by the Treasury Secretary to run until the close of business on September 18, 2009. Funding for the program was drawn not from TARP funds, but from the Exchange Stabilization Fund, which was established by the Gold Reserve Act of 1934. The Exchange Stabilization Fund has assets of approximately $50 million, and the total exposure of the MMMF program is theoretically approximately $3.4 trillion — the total amount of money market mutual funds outstanding as of the third quarter of 2008, when the program was created.”

Related SourceWatch articles

 * SIGTARP Quarterly Report to Congress July 21, 2009
 * Troubled Asset Relief Program

External resources

 * FRBNY factsheet
 * Fed data