Treasury money market fund guarantee program extended from December to April

Good news for money market fund investors. On Monday the U.S. Treasury announced an extension of the Treasury's Temporary Guarantee Program for Money Market Funds until April 30, 2009. If your money market fund has signed up for the program, your account balance as of September 19, 2008 will be fully protected in case the fund "breaks the buck." Without the extension the program would have terminated on December 18, 2008. The program as announced on September 18, 2008 can only be extended until September 18, 2009, but there is an excellent chance that the incoming administration will supersede this "temporary" program with something more permanent.

There is an extremely important caveat on this program: it only covers "balances" in accounts as of September 19, 2008. In particular, the guarantee will not cover any new money since that date, including interest, additional deposits, or new accounts opened or funded after that date. But, it is acceptable to put money back into the account if you had taken it out after that date.

Personally, I have moved most of my money market fund assets to bank money market accounts since banks are now paying better yields than money market funds and with full FDIC protection to boot.

-- Jack Krupansky