US Treasury listen to the Banks re Money Funds Wednesday, October 01, 2008
Image via WikipediaWhen the scheme to underwrite money market funds was mooted by the US Treasury a few weeks ago with the aim of dissuading investors from making panic withdrawals, I commented here how the banks were understandably annoyed since it put them at a considerable competitive disadvantage.
- temporary scheme only lasting 3 months, albeit that will undoutedly be extended if current circumstances prevail
- only covers investments made up to 19 September i.e. investors who fled/flee to "safety" after this date are not protected
- Sliding scale fee charged to a fund based on how far below the "buck" the fund is valued at, with lowest rate being 1 basis point [0.01%]
It is almost certain that every fund will seek to join the scheme - not because they have to or have problems, but because they need to preserve investor confidence and will not want to cause investors concern by not joining.