President Authorizes up to $50 Billion in Guarantees for Money Market Funds
A Federal insurance program for money market funds is appealing, but its feasibility and authority is questionable by Chuck Angier
(libertarian)
Monday, September 22, 2008
In a September 19 press release from the Treasury Department, President Bush authorized Treasury to make available up to $50 billion from the Exchange Stabilization Fund (ESF) to "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."
The August 2008 brief supplied by the ESF (by law) to Congress showed net assets of only $40 billion including almost $17 billion in US Government Securities.
According to the Wall Street Journal, in just two days"....panicked investors withdrew nearly $130 billion out of the $3.4 trillion money-market fund industry."
In a nutshell, the government has obligated the taxpayers to a $50 billion commitment secured by only $40 billion (or $23 billion maybe?) in assets against a $3.4 trillion behemoth that managed to liquidate $130 billion in just two days, and all under questionable authority.
Angier is self-employed in agri-business and can be contacted at chuckangier@gmail.com
.
Did you like this article? If you did, Thumb It! 3
thumbs so far
The views expressed
in this article are those of Chuck Angier only and
do not represent the views of Nolan Chart, LLC or its affiliates.
Chuck Angier is solely responsible for the contents
of this article and is not an employee or otherwise affiliated
with Nolan Chart, LLC in his/her role as a columnist.
Want to comment on
this article? Leave your comment
here. Your email address is required to track your
comment. However, we will neither publish your email
address nor distribute it to other organizations or
persons. The only reason we might use it would be if
we needed to contact you regarding your comment. All
comments are subject to our
terms of use policy.
