Treasury extends money market fund guarantee to Sept.


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No real surprise here, but in case anyone with cash in a money market mutual fund was worried: The Treasury said today it would extend the federal guarantee of money fund assets through Sept. 18.

The guarantee program, put in place last fall as the credit crisis deepened, was to expire April 30 -- but almost nobody figured Uncle Sam would take it away this soon.


The guarantee was offered to the $3.8-trillion money fund industry after a large fund (the Reserve Fund) suffered losses on Lehman Bros. IOUs in September, triggering a run on that portfolio. The government feared that money fund investors would flee en masse.

The Treasury guarantee covers any cash investors had in money funds as of Sept. 19, 2008, but it doesn’t apply to money added since then.

Money funds pay a small fee to the Treasury for the insurance coverage. All of the major mutual fund companies have joined the program.

-- Tom Petruno