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:
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.
As this Bloomberg article describes, the banking industry had pushed for this limit of the guarantee. The banking industry worried that there would be a mass outflow out of bank accounts which have FDIC limits on coverage to money market funds which would essentially provide unlimited insurance. So the Treasury complied and made the coverage apply to only existing balances. As this article explains, there are still many questions, and the Treasury is suppose to provide more details about the program in the coming days.
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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