Tags: reserve | fund

U.S. Agrees to Bail Out Reserve Fund

Friday, 21 Nov 2008 08:52 AM

  Comment  |
   Contact  |
  Print   |
    A   A  
  Copy Shortlink

WASHINGTON -- The US Treasury announced Thursday a rescue of a money market fund operated by investment manager The Reserve, with some 6.3 billion dollars in assets.

"The Treasury has agreed to serve as a buyer of last resort for the fund's securities, which consist of short-term US government and government sponsored enterprise securities," the Treasury said in a statement.

"This action is being taken to ensure that the fund is liquidated in an orderly and timely fashion."

A Treasury official said the government agreed to to purchase any remaining securities in 45 days, which at maximum would total 5.6 billion dollars.

The fund was permitted to suspend share redemptions as of September 17, in agreement with the Securities and Exchange Commission.

The action comes after the government agreed in September to a voluntary guarantee program to stem a run on money market funds, which are generally seen as safe investments but have been pressured by the credit squeeze affecting some of their underlying investments.

The Treasury Department said it "does not foresee a need to take similar actions with regard to any other funds" because Reserve was the only one to have suspended redemptions.

A statment by the New York-based firm said the fund had approximately 6.3 billion dollars in assets, including 231 million in cash.

"Because of this agreement the government fund will be able to return all of the fund's money to investors early next year," said Bruce Bent, president of Reserve Management Company Inc.

"This agreement allows us to achieve our goal of preservation of capital but enables investors to get their money back sooner. I want to thank our investors for their patience and understanding during these past few months."

Copyright © 2008 Agence France Presse. All rights reserved.

-

  Comment  |
   Contact  |
  Print   |
  Copy Shortlink
Around the Web

Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 

You May Also Like
Around the Web

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved