Treasury MMF Guarantee Program Expires

WASHINGTON — The Treasury Department’s guarantee program for money market funds expired Friday after generating $1.2 billion of fees from funds that participated in the program.

The Treasury initially established the program last fall for a three-month period that could be extended up through Sept. 18, 2009, but did not experience any losses under it.

“As the risk of catastrophic failure of the financial system has receded, the need for some of the emergency programs put in place during the most acute phase of the crisis has receded as well,” Treasury Secretary Tim Geithner said Friday. “The guarantee program for money market funds served its purpose of adding stability to the money market mutual fund industry during market disruptions last fall and ultimately delivered a healthy return to taxpayers.”

The program was designed to stabilize the money fund markets after a large fund announced that its net asset value had “broken the buck” or fallen below $1 per share, in the wake of Lehman Brothers’ failure in September 2008.

Treasury officials and others felt at the time that maintaining confidence in the money market mutual fund industry was critical to protecting the integrity and stability of the global financial system.

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