As expected, the Guarantee Program for Money Market Funds expired on Friday, September 18. Under the program, the U.S. Treasury guaranteed the share price of any publicly offered eligible money market mutual fund—both retail and institutional—that applied for and paid a fee to participate in the program. Publicly offered and SEC registered money market funds regulated under Rule 2a-7 with a stable share price of $1 were eligible to participate in the program. The temporary guarantee provided coverage to shareholders for amounts they held in participating money market funds as of the close of business on September 19, 2008.
The Treasury twice extended the guarantee program, first to April 30, 2009, and once more to September 18, 2009. The program, designed to "stabilize markets after a large money market fund's announcement that its net asset value had fallen below $1 per share ("broke the buck") in the wake of the failure of Lehman Brothers in September of 2008," appears to have been successful in maintaining confidence in the money market mutual fund industry and helping to protect the integrity and stability of the global financial system. The guarantee program paid no losses under the program -- that is, no money market fund was bailed out by the program-- and the program earned nearly $1.2 billion in participation fees.
Coincident with the expiration of the guarantee program, the SEC has adopted interim final temporary Rule 30b1-6T which requires money market funds whose NAV drops below $.9975 to file detailed weekly portfolio schedules. The interim final temporary rule is designed to maintain the SEC's ability, as it had under the guarantee program, to monitor money market funds while the Commission considers whether to adopt the amendments to Rule 2a-7 proposed in June 2009. The effective dates of temporary Rule 30b1-6T are September 18, 2009 through September 17, 2010.
The Treasury's announcement can be found at: http://www.treas.gov/press/releases/tg293.htm.
The full text of the SEC release adopting interim final temporary Rule 30b1-6T is available at: http://sec.gov/rules/final/2009/ic-28903.pdf
- "Treasury Extends Money Market Guarantee Program," April 6, 2009
- "Treasury Extends Temporary Money Market Program," November 25, 2008
- "FINRA Guidance on MMF Guarantee Program Disclosures," October 20, 2008
- "SEC No-Action Letter on Money Market Funds Guarantee Program," October 8, 2008
- "Board Duties Under the Temporary Guarantee Program for Money Market Funds," September 30, 2008
- "Treasury Department Opens Temporary Guarantee Program for Money Market Funds," September 29, 2008