Another Fed bullet comes in the form of invoking an emergency authority to backstop prime money market mutual funds.
The Money Market Mutual Fund Liquidity Facility is a repeat from the 2008-era playbook, offering loans to financial institutions for use in buying assets from prime money market funds – which themselves purchase non-Treasury debt, and which have faced recent outflows.
“Money market funds are common investment tools for families, businesses, and a range of companies,” the Fed says. “The MMLF will assist money market funds in meeting demands for redemptions by households and other investors, enhancing overall market functioning and credit provision to the broader economy.”
It’s the second program in two days to tap the $10B from the Treasury Dept. Exchange Stabilization Fund.