USA Today's "Money market funds propose their own emergency backstop" says, "The money fund industry is proposing a private fund to shore up money market mutual funds if they're overwhelmed by investor redemption demands. The proposal by the Investment Company Institute, the funds' trade group, would create a private liquidity fund that would swing into action if a money fund had large redemptions that would force it to pay out less than $1 a share. The fund would make collateralized loans to funds that need extra money to meet large redemptions. Money funds try to keep their share price at a constant $1 a share; interest is paid in fractional shares. To consumers, the $1 share price seems much like a bank account, even though money funds are not insured by the government." The article continues, "The fund industry is proposing the liquidity fund partly to reassure investors and partly to head off a proposal that funds abandon the constant $1 share price for a floating price, much as stock and bond funds have. The President's Working Group raised the idea of floating share prices for money funds in October, and fund companies have nearly universally reacted in horror." USA Today quotes Peter Crane, "There's not a single company or interest group that's in favor of it."
