The Treasury Department said it has opened its Temporary Guarantee Program for Money Market Funds, whereupon the Treasury will guarantee the share price of any publicly offered eligible money market mutual fund – both retail and institutional – that applies, and pays a fee, to participate in the program.
All money market mutual funds that are regulated under Rule 2a-7 of the Investment Company Act of 1940, maintain a stable share price of $1, and are publicly offered and registered with the Securities and Exchange Commission will be eligible to participate in the program.
The temporary guarantee program provides coverage to shareholders for amounts that they held in participating money market funds as of the close of business on Sept. 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.”
The program is designed to address temporary dislocations in credit markets. The program will exist for an initial three-month term, after which the Secretary of the Treasury will review the need and terms for extending the program.
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