The U.S. Treasury Department today announced the establishment of a temporary guaranty program for the U.S. money market mutual fund industry. For the next year, the U.S. Treasury will insure the holdings of any publicly offered eligible money market mutual fund - both retail and institutional - that pays a fee to participate in the program.
Concerns about the net asset value of money market funds falling below $1 have exacerbated global financial market turmoil and caused severe liquidity strains in world markets.
This NY Times article has more news of this announcemnt.
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.
This week investors were moving money out of money market funds to T-bills so fast that on Wednesday, the yield on the 3-month T-bill went negative for a brief time (see article). It seems likely that banks would also see increased deposits which would allow banks to cut rates. But now with money market funds being insured, the flow of money from the funds into bank accounts should go back to normal which should force banks to keep their rates up.