Treasury: tax-exempt funds can use new guaranty

[UpInArms]

Source: Reuters

U.S. Treasury Department said on Sunday tax-exempt money market funds would not jeopardize the tax-exempt treatment of their payments by participating in an emergency backstop program announced by the government this week.

"Participation in the temporary guaranty program will not be treated as a federal guaranty that jeopardizes the tax-exempt treatment of payments by tax-exempt money market funds," the Treasury Department said in a statement.

Worry about withdrawals from money market mutual funds prompted the Treasury to announce early on Friday that it would back such funds, a bedrock of conservative savings, with up to $50 billion of government funds.

The Federal Reserve shortly thereafter announced it would open its discount window to financial institutions to enable them to purchase certain assets from money market funds, further underscoring the importance of maintaining confidence in the funds.

Problems with money market funds were a trouble new development last week in an overall crisis in financial markets that led President George W. Bush to announce on Friday his administration was willing to devote massive amounts of government cash to absorb toxic mortgage assets. The government is now negotiating with Congress a plan to use to $700 billion of funds to cleanse the financial system of assets tainted by delinquent mortgages.

Both taxable and tax-exempt money market funds are eligible for the Treasury safety net, Treasury said in its Sunday announcement.

Read more: http://www.reuters.com/article/bondsNews/idUSN2151508120080922

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Come one, Come All! Well - everyone except the little guy! All you other pigs, get ye to thee trough!

OINK! OINK! OINK!

Heh! Heh! We'll get those taxpayers into deeper doo-doo yet, smirked the Chimp!

[angstlessk]

1. they take higher interest because they are NOT insured..but when their

institution into which they invested AND got above average interest returns goes belly up..THE FUCKING TAXPAYER bails them out..and NO LIMIT AS IN THE FDIC which insures savings (see tiny interest rates) only to $100,000??

[ixion]

2. well, they've really thrown open wide the doors to the vault

free handouts for all the multi-nationals.

This is pathetic. :argh: :grr:

[antigop]

3. This is unreal. Absolutely unreal. n/t

[bemildred]

4. We're making it up as we go along now ...

Like empires do.