The current controllers of our Federal Tax Monies have proposed an undefined plan to guarantee or totally insure Money-Market Funds. Whether the plan is ill-defined remains to be seen, for the plan is not a plan, yet. It is the idea of a plan.
Here are the features, maybe, according to a spokesperson for the Treasury Department quoted by Josh Friedman, "U.S. Offers to Insure Money Market Mutual Funds" (Los Angeles Times Online, Saturday, September 20, 2008):
- Insurance Coverage would be made available by the Federal Government to "general purpose funds, with government and tax-free municipal funds excluded."
- There is likely to be no policy limit. The Insurance Coverage will be without limit. (Since there is a limit on the amount of Federal Deposit Insurance Coverage at traditional banks, it seems like a good bet that this proposal will generate a large transfer of deposits into money-market funds instead.)
- The total initial amount of Insurance Coverage for all potentially covered money-market funds is $50,000,000,000.00 or $50 Billion.
That is Fifty Billion Dollars of our Federal Taxpayer Monies, dear Federal Taxpayer.
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