Treasury Clarifies Its Money Market Fund Guaranty Program
Sep 22, 2008 - 7:38 PM by Ken Tumin
The Treasury issued a new press release on Sunday clarifying its new Guaranty Program for Money Market Funds which they first announced on Friday. Two important clarifications include:
It's important to note that money market funds are different than money market accounts. Money market account is basically the same as a savings account which is FDIC-insured and offered by banks. Money market fund is a mutual fund holding a collection of short-term debt investments, and it is not FDIC insured.
- Eligible funds include both taxable and tax-exempt money market funds
- The temporary guaranty program will be designed to provide coverage to shareholders for amounts held by them in such funds as of the close of business on September 19, 2008.
It's important to note that money market funds are different than money market accounts. Money market account is basically the same as a savings account which is FDIC-insured and offered by banks. Money market fund is a mutual fund holding a collection of short-term debt investments, and it is not FDIC insured.
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Anonymous - #1, Monday, September 22, 2008 - 10:20 PM
Sounds unworkable. Say you take 100k out of the MM account and then put it back in a week later.
Not covered.
Anonymous - #2, Tuesday, September 23, 2008 - 1:21 AM
That would be still be covered, as long as you had at least 100k in the MMF as of close of business Sep 19.
Anonymous - #3, Tuesday, September 23, 2008 - 6:04 AM
Any proposals/official discussion of increasing FDIC limits?
Anonymous - #4, Tuesday, September 23, 2008 - 6:40 AM
Seems like the best solution would have been to limit the coverage for the money market funds to $100K per person just like the FDIC. I know that is an extremely low limit, but it is not really fair to now cover a MMF with $1M while still only covering $100K in a bank.
With a democratic congress and if Obama gets in there definately wont be an increase in the FDIC limit !!!
Anonymous - #5, Tuesday, September 23, 2008 - 11:35 AM
This just seems really half-assed. If they guarantee money markets, it's just going to take money from the banks -- who really need it.
Anonymous - #6, Tuesday, September 23, 2008 - 6:07 PM
9:35, did you read the post? New money will not be covered, so there is no reason to pull money from FDIC accounts and put in MM funds.
[quote]The temporary guaranty program will be designed to provide coverage to shareholders for amounts held by them in such funds as of the close of business on September 19, 2008.[/quote]
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