The Reserve has posted "Reserve Primary and Government Funds Disbursement Update," which says, "The Reserve is pleased to announce that the Primary Fund's initial distribution will be approximately $25 billion plus cash accumulated through the distribution date, rather than $20 billion as previously announced. The Fund has been accumulating cash for this purpose and will continue doing so for future distributions.... We are making every effort to return investors' money as quickly as possible. Some final trade reconciliations remain. Based on work already completed, it's now our best estimate that the initial distribution will be made at the end of next week. The Government Fund has accumulated approximately $3 billion for its initial distribution. While not set in stone, we currently expect the initial Government Fund distribution will occur relatively soon after the initial Primary Fund distribution.... [T]he initial Government Fund distribution will be made approximately seven to 10 days after the initial Primary Fund distribution.... Once again, we thank all of our investors for their patience."
In other news, the ICI has posted a "Frequently Asked Questions about the Money Market Investor Funding Facility". Its Q&A's include: "Q: What is the Money Market Investor Funding Facility? A: The Federal Reserve Board created the Money Market Investor Funding Facility on October 21 to support a private-sector initiative to provide liquidity to U.S. money markets. The MMIFF and the initiative are designed to help restore confidence and active trading in the money markets, which are vital to the short-term financing needs of American businesses." It also asks, "Q: What problems will the MMIFF address? A: Short-term credit markets have been under considerable strain in recent weeks. Investors, including money market mutual funds, have had difficulty selling assets into the secondary market. As a result, investors have favored extremely short-term commercial paper (CP) or certificates of deposit (CDs) maturing in seven days or less. The tight markets in longer-dated commercial paper have in turn made it difficult for financial institutions and businesses to raise funds to finance inventory, payroll, and other needs."
ICI also says, "The Fed has already announced two facilities to add liquidity to the money markets. How does the MMIFF fit with those?" ICI explains, "The MMIFF complements two previously announced facilities: The Commercial Paper Funding Facility (CPFF), which on October 27 will begin funding purchases of highly rated, U.S.-dollar denominated, three-month, unsecured and asset-backed commercial paper issued by U.S. issuers; and The Asset Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF), announced on September 19, 2008, which extends loans to banking organizations to purchase asset backed commercial paper from money market mutual funds. The AMLF focused on asset-backed commercial paper, and the CPFF will purchase CP directly from issuers. Neither covers purchases of existing unsecured money market instruments, which is the focus of the MMIFF. All three facilities are intended to improve liquidity in short-term debt markets and thereby increase the availability of credit."
See also the SEC's recent "no-action" letter on the program.
