Topic: Economics
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 questionableby 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
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