"Banks Tapped to Bolster FDIC" says a press release from the Federal Deposit Insurance Corporation. It says, "The Board of Directors of the Federal Deposit Insurance Corporation today adopted a Notice of Proposed Rulemaking (NPR) that would require insured institutions to prepay their estimated quarterly risk-based assessments for the fourth quarter of 2009 and for all of 2010, 2011 and 2012. The FDIC estimates that the total prepaid assessments collected would be approximately $45 billion. The FDIC Board also voted to adopt a uniform three-basis point increase in assessment rates effective on January 1, 2011, and extend the restoration period from seven to eight years." It quotes FDIC Chairman Sheila C. Bair, "First and foremost, bank customers should know that their insured deposits have and always will be 100 percent safe, no matter what. This commitment to depositors is absolute. The decision today is really about how and when the industry fulfills its obligation to the insurance fund. It's clear that the American people would prefer to see an end to policies that look to the federal balance sheet as a remedy for every problem.... This proposal is a vote of confidence for the banking industry's resilience, and it will continue to recover its strength as we work through the significant challenges ahead."
Orrick's "Proposed Regulatory Capital Standards Related to Adoption of FAS 166 and 167", which we saw mentioned in this week's Credit Suisse Asset Backed Commercial Paper Weekly Newsletter, discusses a recent bank regulators' release involving the "Consolidation of Asset-Backed Commercial Paper Programs. It says, "Beginning in 2010, FAS 166 and FAS 167 will require certain banking organizations1 to consolidate certain securitized assets that are currently excluded from these organizations' balance sheets.... The Proposed Rule would eliminate existing provisions in the risk-based capital rules that permit a banking organization that is required to consolidate under GAAP an ABCP program for which the banking organization acts as sponsor to exclude the consolidated ABCP program assets from risk-weighted assets and instead assess the risk-based capital requirement against any contractual exposures of the organization arising from such ABCP programs.... In light of the increased incidence of banking organizations providing non-contractual support to these programs, as well as general credit risk concerns, the Agencies have determined that continuing the exclusion of consolidated ABCP program assets from riskweighted assets is no longer justified." In other news, see U.S. News & World Report's "SEC Looks to Put Buck Back Together in Money Market Case" and press release "Reserve Yield Plus Fund Distributes $60 Million".
The Association of Financial Professionals is preparing for its Annual Conference Info, which starts this Sunday (Oct. 4) in San Francisco. While Crane Data won't be in attendance this year because the event dates are right on top of our monthly publishing deadlines, a number of institutional money market funds will no doubt continue to pay the $5,800+ to exhibit to the audience of thousands of corporate treasurers. This year's show even includes a couple of sessions on money fund and cash investing. These include: Simon Mendelson, MD & COO of BlackRock, will give a "Luncheon Address: Navigating the Changing Landscape of Cash Investing." Its description says, "The greatest financial crisis in almost a century has affected businesses large and small, across all industries in every corner of the globe. Hear an insightful review of market events, including an update on the effects of global government interventions on the cash markets and money market funds. The impact of these measures on short-term investors and considerations going forward will also be discussed." In addition, Steven Meier, Executive VP & CIO of State Street Global Advisors and Omar Paz, Assistant Treasurer of PayPal will present "Credit Analysis for Cash Investments." Its description says, "The focus of this session will be an in depth review of best practices used to evaluate the creditworthiness of short duration investments." In other news, see Bloomberg's "Obama Stock Advance Persists on Money Fund Hoarding" and WSJ's "Texas 529 Plan Replaces Stable Value Fund With Money Market".
Investment News features "Keeping an eye on stable-value", which interviews Michael Markov, head of Markov Processes International LLC. The piece says an area of concern of Markov's is stable-value funds. (See Markov's original article, "Stable Value a free lunch?".) Markov told IN, "There are $500 billion in these funds, the SEC doesn't regulate them and no one knows what's inside them. They're attractive because they are supposedly risk-free, yet offer much higher returns than money market funds. How is that possible?" Investment News adds, "He's not sure, and is doing research to find out what's really going on under the hood." Markov added, "`Nothing is risk-free; there are always risks." See also, The Wall Street Journal's "Regulator on Fees: Hands Off, Courts", which quotes SEC Commissioner Troy Paredes, "Speaking at the Investment Company Institute's 11th annual Capital Markets Conference, Mr. Paredes also said he had questions about the SEC's plans for money-market funds. He questioned the SEC's proposal to ban funds from investing in so-called second-tier securities ... calling the Reserve Primary collapse 'an outlier event.' He said he has seen no evidence that there was a causal relationship between second-tier securities held by the funds and the problems that money-market funds faced last year. It should be asked whether banning money-market funds from holding any second-tier securities could hurt their diversification and yield, Mr. Paredes said." Finally, see WSJ's "SIV Liquidation Set as Demand on Rise", which mentions the "liquidation sale of the assets of Victoria Finance, a structured investment vehicle formed by Ceres Capital Partners LLC." The Journal says, "Friday's sale is the largest auction of structured products since the $7.1 billion liquidation of the Whistlejacket structured investment vehicle, or SIV, in April."
The Reserve has posted a press release entitled, "Update to Primary Fund Distribution Schedule," which says, "The Reserve is pleased to announce that it will begin the fifth distribution to Primary Fund shareholders on or about October 2, 2009. This distribution in the amount of approximately $1 billion represents approximately 22% of the Fund's remaining asset value of $4.5 billion as of the close of business on September 22, 2009. Including this fifth distribution, $47.1 billion, or approximately 92% of Fund assets as of the close of business on September 15, 2008, has been returned to investors to date. Approximately $3.5 billion remains in the Fund, which includes the Lehman Brothers Holdings Inc. securities held in the Fund, which are valued at zero." It continues, "This fifth distribution is being paid pro rata to all investors remaining in the Fund, including those who submitted redemption orders that had not been funded and those who have not submitted redemption orders. The Fund's net asset value fell below $1.00 per share on September 16, 2008. Each investor's pro rata share for this fifth distribution was calculated using the account balance after the previous four distributions.... This distribution represents principal only. The income accrued after September 14, 2008 is addressed in the Fund's Plan of Liquidation." See also, AP's "Fallen money-market fund makes $1B distribution".
CNNMoney comments on "The risk of 'breaking the buck'". A reader asks, "I just heard that the federal government is no longer insuring money market accounts for their $1 per share value. Is that correct?" CNNMoney answers, "I think some people may have misunderstood the reports they've heard about the Treasury Department's announcement last week that it was letting its temporary money market fund guarantee program expire. The first thing you need to understand is that there are actually two types of money market vehicles that are sometimes confused with one another: money market [deposit] accounts and money market funds. Even though their names are similar, however, they are actually two very different types of investments that offer very different types of protection.... Although money market funds are not covered by the FDIC, they provide security another way -- namely, by attempting to keep a stable price or net asset value of $1 per share. By law, money market funds must limit themselves to high-quality debt securities. That reduces the chances of any of their holdings defaulting. Money market funds are also required to stick to debt with very short maturities, which makes it unlikely the value of their portfolios will drop when interest rates rise."
WSJ's "SEC Continues To Monitor Money-Market Funds For Risk", says, "While the government has dropped its special backing for money-market funds, the Securities and Exchange Commission is obliging these funds to continue to report holdings and valuation information in certain circumstances." (See yesterday's Crane Data News.) The Journal adds, "Under the rule, announced in a release on Friday and effective for one year, money-market funds must report to the SEC information similar to that they gave to both the Treasury Department and the SEC during the last year under a Treasury guarantee program. That program, put in place last autumn to help stabilize the funds, expired Friday." It adds, "Money-market funds experienced outflows of $6.6 billion on Friday, according to Peter Crane, president of Crane Data LLC.... [Recent] outflows are large, said Crane, but aren't out of line in a week when quarterly corporate tax payments and individual quarterly estimated tax payments are due." "It appears that outflows were primarily tax-related, and that outflows related to the expiration of the Treasury guarantee are minimal," Crane said. See also, WSJ's "State Regulator Opposes SEC Plan for Reserve Primary Fund Assets", which says, "The top securities regulator in Massachusetts is opposing a Securities and Exchange Commission proposal for distributing the remaining assets in the Reserve Primary Fund, the money-market fund that struggled with investment losses and panicked selling after Lehman Brothers' collapse a year ago."
The Wall Street Journal's The Intelligence Investor column writes, "Don't Trip in Your Search for Higher Bond Yields". The Weekend Journal article says, "The Federal Reserve's policy of driving interest rates down toward zero may have kept the financial system alive. But it is killing savers, and driving them to do desperate things. Nearly 78% of taxable money-market funds, the traditional parking place for savings, are offering 0.1% or less in annualized yield, according to Crane Data LLC, a research firm. On a $10,000 balance, that will earn you a maximum of 83 cents -- yes, $0.83 -- in monthly interest income. All told, these funds hold $1.3 trillion that will generate a return of just about zilch for the people who worked so hard to save it. Is it any wonder that investors are barging into bonds?" The piece continues, "At Vanguard Group, more than $51 billion has cascaded into bond funds this year.... Industrywide, investors sank over $40 billion into bond funds in August, an all-time high for a single month, and are on pace to break that record again in September." The Journal quotes Robert Auwaerter, Vanguard's head of fixed-income investing, "It's been like Niagara Falls." It warns, "That mightn't be troubling if investors were merely taking baby steps out of money-market funds, whose three-month average maturities minimize the danger of losses if interest rates rise. Remember, rising rates mean falling bond prices." Finally, it quotes Crane Data president Peter G. Crane, "People feel they have to choose between the frying pan of zero yields and the fire of risk. And they're sick of the frying pan, so they're jumping into the fire."
Treasury Announces Expiration of Guarantee Program for Money Market Funds. The release, issued this morning, is subtitled, "Program Winds Down as anticipated, Generates $1.2 billion in participation fees for U.S. Taxpayers." It says, "The U.S. Department of the Treasury today announced that the Guarantee Program for Money Market Funds will expire today. The Program was initially established for a three-month period that could be extended up through September 18, 2009. Since inception, Treasury has had no losses under the Program and earned approximately $1.2 billion in participation fees." Treasury Secretary Tim Geithner says, "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. 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 release also says, "Treasury designed the Program to stabilize markets after a large money market fund's announcement that its net asset value had fallen below $1 per share ("broke the buck") in the wake of the failure of Lehman Brothers in September of 2008. Maintaining confidence in the money market mutual fund industry was critical to protecting the integrity and stability of the global financial system." See also, Bloomberg's "Treasury Closes Money-Fund Insurance a Year After Run", which quotes Peter Crane, "This will be the first big test for whether the market has truly improved.... Funds will easily pass the test."
Reuters writes "Investors pull out of money market funds as guarantee ends". It says, "Investors stepped up their withdrawals from money market funds this week days before a federal guarantee to safeguard their assets expires on Friday, industry data show. The outflows could sharpen scrutiny of how to regulate the funds, which now hold $3.5 trillion despite paying almost no interest of late. Investors took out a total of $55 billion from money market funds on Tuesday and Wednesday, far more than usual, Peter Crane, president of fund-watcher Crane Data LLC, said in an interview." Crane told Reuters, "There's a glimmer of evidence that there is money leaving because of the end of the guarantee." The article added, "Still, Crane and other industry analysts said they do not expect panicked withdrawals since investors have had months to prepare for the end of the insurance program." See also, Reuters' "U.S. Treasury to keep $1.2 billion money fund premiums", which says, "The U.S. federal government will keep about $1.2 billion in payments collected to backstop money market funds even after its insurance program ends on Friday, a U.S. Treasury official said." See too, ICI's weekly "Money Market Mutual Fund Assets", which says, "Total money market mutual fund assets decreased by $62.60 billion to $3.482 trillion for the week ended Wednesday, September 16." Finally, see LA Times' "U.S. money market fund guarantee, R.I.P.", which quotes, "Pete Crane, editor of the Money Fund Intelligence newsletter, notes that even though the guarantee program is disappearing many of the debt securities that money funds own retain some kind of government or Federal Reserve backstop, thanks to the alphabet soup of lending programs put in place amid the credit crisis last fall."
The Wall Street Journal writes "Low Yields Dog Money Funds as Guarantee Is Set to Expire". It says, "The government guarantee for money-market fund investors expires Friday, but plenty of worries remain for the industry. Fund managers complain of rock-bottom yields that are pinching profits and regulatory uncertainty. Moreover, the end of the guarantee program may spur investors to switch funds. A year ago, the federal government was forced to step in after Reserve Primary Fund 'broke the buck,' or dipped below the $1-per-share level typically maintained by these funds, sparking withdrawals. The government stabilized the situation by guaranteeing shareholder balances in participating funds as of Sept. 19, 2008." The Journal adds, "Until now, some investors may have been reluctant to sell participating money funds because they didn't want to lose the guarantee, said Peter Crane, president of Crane Data, which tracks the money markets. While some funds are keeping extra cash on hand this week to handle any increase in redemptions, many managers said they are largely unconcerned about the guarantee's expiration." See also, USA Today's "Money market mutual funds remain at risk of 'breaking the buck'".
The MutualFundWire.com writes from Schwab IMPACT on "The Future of Money Funds" panel. See also, WSJ's "Money Funds Prepare For Guarantee's End", James Stewart's "A Year Later, How Safe Is Safe?", and WSJ's "Lehman's Demise Hit Repo Market With A Lag". The first WSJ story quotes Peter Crane, president of Crane Data LLC, which tracks money-market fund assets. "It's as if a tsunami went through, and then washed out so fast that it did damage to the population, but all the structures and such dried out so fast that, amazingly, it may end up that we go back to where we were before September 2008." The article continues, "Money-market funds held about $3.58 trillion in assets just before the Reserve news hit and dipped to $3.46 trillion late last September before investors regained their composure, according to the Investment Company Institute. Assets in the funds had surged to $3.9 trillion by March of this year and have now slipped back to about $3.5 trillion, according to the ICI. The Securities and Exchange Commission proposed reforms for money-market funds in early July. Some had hoped those would be in place before the guarantee program expired, but that's highly unlikely. Crane notes that, through other government programs, about 80% of the securities money-market funds invest in are supported until Feb. 2, 2010. Looking ahead, Crane said money-market fund yields will be reduced by anywhere from two to three basis points to 20 to 30 basis points, likely in the five- to 10- basis-points range."
Reuters' "U.S. government financial support, exit plans" says, "The U.S. government is plotting a gradual exit from financial rescue and support programs worth trillions of dollars, one year after taking unprecedented action to prevent a devastating market collapse. Following is a rundown of the government's bailout and support efforts, including approaching expiration dates for some programs.... The Federal Deposit Insurance Corp last year pledged to guarantee up to $1.4 trillion in debt issued by banks. The program will end for newly issued debt as scheduled on October 31, but the agency is considering whether to provide emergency guarantees for six more months on a case-by-case basis.... The FDIC last month extended its guarantee program for some $700 billion in transaction deposit accounts until June 30, 2010.... The Treasury will allow a guarantee program for money market mutual funds to expire on September 18. The Treasury had pledged up to $50 billion to prevent mass withdrawals from money market funds a year ago. It has not had any payouts, but took in $1.2 billion in fees from funds. The Fed pledged to buy up to $600 billion of commercial paper and certificates of deposit under a Money Market Investor Funding Facility. As of September 10, the Fed held nothing in this facility. It expires February 1, 2010."
The Washington Post's "Mr. Geithner Unwinds" says, "Testifying before Congress has not always been fun for Treasury Secretary Timothy F. Geithner. But his Thursday visit to Capitol Hill gave him a chance to report some good news. According to Mr. Geithner, the threat to money-market mutual funds, which hold more than $3 trillion in assets, has eased. The Treasury can unwind its program that guaranteed the share price of these funds in return for a fee. The Bush administration created it on Sept. 19, 2008, after the collapse of Lehman Brothers and the resulting shock to the market for short-term corporate debt known as commercial paper. Mr. Geithner's announcement confirms that the guarantee, which the Obama administration extended, helped prevent a devastating run on the money-market funds. The government even made $1.2 billion on the deal. The fact that Mr. Geithner can remove this crutch from the financial system is further evidence of its healing, as the first anniversary of the Lehman Brothers debacle approaches. So, too, is the Federal Deposit Insurance Corp.'s reported plan to either end or sharply limit a $300 billion guarantee program for bank debt by the end of October." In other news, see FT's "Bank runs left repo sector exposed", WSJ's "There's No Such Thing as a 'Safe' Investment", WSJ's "Reserve Yield Plus Investors in SEC Plea", and WSJ's "Government's Trial and Error Helped Stem Financial Panic".
"Money market fund guarantee program to end" says AP. The article states, "The Obama administration said Thursday that a program used to guarantee as much as $3 trillion in money market mutual fund assets will end on schedule next week. The program, which will be closed down on Sept. 18, had no direct cost to taxpayers and earned more than $1 billion in fees paid by the mutual fund industry, according to the Treasury Department. It was established at the height of the financial crisis last fall after a large money market fund 'broke the buck' -- meaning the value of its underlying assets fell below $1 for each investor dollar put in. Investors were exposed to losses after the Primary Reserve Fund conceded that $785 million it had invested in the debt of Lehman Brothers became worthless after the investment bank's bankruptcy in September 2008. The funds are a mainstay of financial management for U.S. families and companies because they're viewed as safe and easily accessible investments that offer returns exceeding those of conventional savings accounts. They generally invest in the safest types of debt such as Treasury bonds." See also, the San Francisco Chronicle's "Money market guarantee program expiring".
MarketWatch's "The Day the Buck Broke" subtitled, "Lehman's collapse almost brought down the money-market industry," says, "As the threat of a Lehman Brothers bankruptcy grew last September, many money-market fund managers were wary but not worried. Their industry had quietly grown over the past generation to become a major rival to the banking system, with $3.5 trillion in assets. It had weathered crises such as the collapse of Baring Plc, the Asian currency mess ... and the fall of hedge fund giant Long-Term Capital Management. Though some managers were talking to their boards and their staff, there wasn't a feeling of impending disaster. But all that changed in the late afternoon of Sept. 16, the day after Lehman actually went down. Reserve Primary Fund -- the oldest and fifth-largest fund in the business -- said it had about $785 million in Lehman debt that was now worthless and as a result it would price its shares at 97 cents." They quote Peter Crane, "Countless other money-market funds were poised to break the buck.... The mini-run would have spread to all funds." The article adds, "Despite the reform efforts, some say that last year's events may simply have to be seen as a once-in-a-lifetime event." "`The SEC may be able to prevent one or two dominos from falling, but nothing could have prevented the complex series of events that led to what happened [last September]," said Crane. See also, `Bloomberg's article on Reserve, "Sleep-At-Night-Money Lost in Lehman Lesson Missing $63 Billion".
The recent surge in money fund-related articles in the general press continued this past week with Friday's USA Today asks "Why do you own a money market fund?", CNNMoney.com's "Why money market funds may get riskier", Chuck Jaffe of MarketWatch's "Stupid Investment of the Week: Floating NAV money fund is lost at sea", InvestmentNews' "Floating NAV for money market funds is not seaworthy, critics say", and, finally, WSJ's "Judge Limits Credit Firms' 1st-Amendment Defense" (involves Cheyne Finance). USA Today columnist John Wagoneer wrote, "Move your savings from a money market mutual fund to a one-year bank CD, and you'll earn enough interest to buy a new tent for your flea circus -- but not much more. At these rates, it's a good idea to ask yourself why you own a money fund. Even at today's rates, money funds are a good tool for reducing risk in your portfolio. But if you're looking for income or just stashing some cash, you'd be better off elsewhere. The average money fund yields 0.06%, according to iMoneyNet, which tracks the funds. That's $6 a year on a $10,000 investment. At that rate, you'll double your money in 1,200 years." Investment News says, "DWS Investments, however, is jumping the gun by announcing plans for a money fund with a floating NAV before the SEC makes a final decision, said Peter Crane, president of Crane Data LLC, a money fund tracking firm. There is a lot of opposition to the idea because many industry experts -- including him -- believe a floating-rate NAV would actually make things worse, he said." Crane says, "It's fraught with peril and confusing to the market place."
ICI's weekly "Money Market Mutual Fund Assets" release says, "Total money market mutual fund assets decreased by $21.35 billion to $3.559 trillion for the week ended Wednesday, September 2.... Taxable government funds decreased by $17.05 billion, taxable non-government funds decreased by $3.28 billion, and tax-exempt funds decreased by $1.02 billion. Assets of retail money market funds decreased by $4.97 billion to $1.163 trillion. Taxable government money market fund assets in the retail category decreased by $2.14 billion to $183.78 billion, taxable non-government money market fund assets decreased by $1.98 billion to $724.68 billion, and tax-exempt fund assets decreased by $850 million to $254.18 billion. Assets of institutional money market funds decreased by $16.38 billion to $2.396 trillion. Among institutional funds, taxable government money market fund assets decreased by $14.91 billion to $973.16 billion, taxable non-government money market fund assets decreased by $1.30 billion to $1.237 trillion, and tax-exempt fund assets decreased by $170 million to $185.53 billion."
The Wall Street Journal writes "Deutsche Bank Unit Proposes Floating NAV For Money-Mkt Fund". It says, "Deutsche Asset Management has proposed launching a money-market fund with a floating net asset value, designed to serve as a complement to a traditional money-market fund. The asset manager has proposed in a letter to the Securities and Exchange Commission that the regulator consider permitting mutual-fund companies to offer both stable net asset value and floating net asset value money-market funds, a notion many in the industry have spoken out against.... Peter Crane, president of Crane Data, which tracks money-market fund flows, said the Securities and Exchange Commission will likely take a long, hard look at the proposed fund." He says, "This certainly appears to be a new type of animal. The entire money-market fund business standardized around the $1 NAV and amortized cost.... If such a fund's net asset value per share dipped below $1, it could be misunderstood and spark fear, Crane said. Many of those who have commented on the SEC's proposed reforms have spoken out against the notion of a money-market fund with a floating net asset value, he noted." See also, MarketWatch's "Floating NAV money-market fund on tap", which says, "As the money-market fund industry grapples with how to reform in the wake of last year's troubles, one fund firm is breaking out with a plan to launch a money fund doesn't try to maintain a $1 share price. DWS Variable NAV Money Fund would be the first publicly-available money-market fund to opt for a floating net asset value -- marking its assets to market each day -- in more than 20 years, say industry professionals." It adds, "Peter Crane, president of Crane Data, said he 'couldn't imagine' the fund being a success." "People don't mind [a] floating NAV, they just don't like it when it goes down," he said. "Crane added that in his mind a floating NAV money-market fund was essentially simply an ultra-short bond fund. He also said that he didn't think the launch would lead to more floating NAV funds," says MarketWatch.
ignites writes "DWS Bucks Trend With Pending Floating NAV Fund". The article says, "DWS Investments is seeking to launch an institutional money market fund with a floating net asset value. The company's filing says, "Unlike a traditional money market fund, the fund will not use the amortized cost method of valuation and does not seek to maintain a stable share price of $1.00. Instead, the fund generally values its portfolio securities using the information furnished by an independent pricing service. As a result, the fund's share price, which is its net asset value per share (NAV), will vary and reflect the effects of unrealized appreciation and depreciation and realized losses and gains. Because the fund values its securities using currently available market prices instead of amortized cost, the Advisor believes that the likelihood of redemptions by shareholders solely to avoid unrealized depreciation or realized losses is mitigated. The fund is managed in accordance with the quality, maturity and diversification requirements of Rule 2a-7 under the Investment Company Act of 1940 (1940 Act). The fund will maintain a dollar-weighted average maturity of 90 days or less in accordance with Rule 2a-7." Crane Data, however, is still unclear whether this is indeed a new (or rather very old) type of money fund, or whether it's a one-off vehicle designed for variable annuities or 401k plans. (Companies are not allowed to comment on pending filings.)
The Federal Deposit Insurance Corporation recently posted a release its "Final Rule regarding Limited Amendment of the Temporary Liquidity Guarantee Program to Extend the Transaction Account Guarantee Program with Modified Fee Structure," which says, "To assure an orderly phase out of the Transaction Account Guarantee (TAG) component of the Temporary Liquidity Guarantee Program (TLGP), the FDIC is extending the TAG program for six months until June 30, 2010. Each insured depository institution (IDI) that participates in the extended TAG program will be subject to increased fees during the extension period for the FDIC's guarantee of qualifying noninterest-bearing transaction accounts. However, each IDI that is currently participating in the TAG program will have an opportunity to opt out of the extended TAG program. Each IDI that is currently participating in the TAG program must review and update its disclosure postings and notices to accurately reflect whether it is participating in the extended TAG program." It explains, "The FDIC established the TLGP in October 2008 following a determination of systemic risk by the Secretary of the Treasury (after consultation with the President) that was supported by recommendations from the FDIC and the Board of Governors of the Federal Reserve System (Federal Reserve). The TLGP is part of a coordinated effort by the FDIC, the U.S. Department of the Treasury (Treasury), and the Federal Reserve to address unprecedented disruptions in credit markets and the resultant inability of financial institutions to fund themselves and make loans to creditworthy borrowers.... Designed to assist in the stabilization of the nation's financial system, the FDIC's TLGP is composed of two distinct components: the Debt Guarantee Program (DGP) and the TAG program.... Pursuant to the TAG program the FDIC guarantees all funds held in qualifying noninterest-bearing transaction accounts at participating IDIs."
The release "Three Additional Share Classes Of Western Asset/Citi Institutional Cash Reserves Rated 'AAAm'" says, "Standard & Poor's Rating Services said today that it assigned its highest principal stability fund rating of 'AAAm' to Class S of Western Asset/Citi Institutional Cash Reserves and Class 1 and Class 3 of Western Asset/Citi Institutional Cash Reserves Ltd. Western Asset/Citi Institutional Cash Reserves is part of a master/feeder structure that invests all of its investable assets in the 'AAAm' rated master fund named the Prime Cash Reserves Portfolio, a diversified, open-end management investment company with same investment objectives and policies. Western Asset/Citi Institutional Cash Reserves Ltd. is another feeder under the 'AAAm' rated Prime Cash Reserves Portfolio and is an open-end, diversified mutual fund that has been incorporated as an exempted company in the Cayman Islands." In other ratings news, S&P writes "Neuberger Berman Money Funds Ratings Withdrawn At Manager's Request", which says the ratings agency, "withdrew its 'AAAm' principal stability fund ratings on the Neuberger Berman Government Money Fund, Neuberger Berman Prime Money Fund, and the Neuberger Berman Treasury Fund at the request of the Funds' manager, Neuberger Berman Management LLC. The Funds' assets, all of which meet our 'AAAm' principal stability fund ratings criteria, were transferred in kind ... into the 'AAAm' rated State Street Institutional Liquid Reserves Fund, State Street Institutional U.S. Government Money Market Portfolio, and State Street Institutional Treasury Plus Money Market Portfolio, respectively, managed by State Street Global Advisors (SSgA). The transfer of the Neuberger Berman money funds' assets does not affect the current 'AAAm' ratings on the aforementioned State Street funds."