US extends money market guarantee
WASHINGTON - The Treasury said yesterday that it would extend its emergency program guaranteeing money market funds through Sept. 18 from the previous deadline of this month.
All funds that currently participate in the program are eligible to continue, the department said. The program, scheduled to end April 30, will be continued "to support ongoing stability in financial markets," it said.
"There's really no reason not to extend it," said Peter Crane, president of Crane Data LLC, a money-fund tracking firm in Westborough. "The fund industry clearly would like to wean itself off the program, but people are going to wait and see how fragile money markets remain until September."
The program covers more than $3 trillion of combined fund assets, the Treasury said.
The Treasury instituted the program in the days after the collapse of the $62.5 billion Reserve Primary Fund to stanch a run of investors out of money funds that can invest in company debt, known as prime funds.
On Sept. 16 it became the first money fund in 14 years to drop below $1 a share because of losses on debt issued by bankrupt Lehman Brothers Holdings Inc.