WASHINGTON — The Treasury Department extended its $3 trillion temporary guarantee program for money market mutual funds through Sept. 19 to provide continued reassurance for investors.
The program, which was scheduled to expire on April 30, will continue to provide coverage for shareholders up to the amount they had invested in a participating fund as of Sept. 18, 2008. Funds that currently participate in the program must file for the extension by April 13 and meet certain requirements. New funds will not be eligible for the program.
Money market funds will continue to pay the Treasury a fee for participation based on their net asset value as of Sept. 19, 2008, and relative to their size. The cost of participation should equal four or six basis points on an annualized basis of a fund’s asset base for the entire program, the Treasury said.
The Treasury established the backstop on Sept. 18 to prevent a wave of investor withdraws from money market funds after the $65 billion Reserve Primary Fund “broke the buck” two days earlier.