Broken Bucks: Money Funds that Took Taxpayer Guarantees in 2008
University of Louisiana at Lafayette - College of Business Administration
August 28, 2015
This is the first study to look at the characteristics of funds accepting the $2.7 trillion taxpayer guarantee of money market mutual funds during the 2008 financial crisis. Funds with lower asset maturities were significantly less likely to need federal or sponsor bailouts. Fund shares that benefited from Federal Reserve’s asset-backed commercial paper program were significantly more likely to get bailed out by taxpayers and sponsors. Finally, the paper tests if funds adhering to the SEC’s 2010 liquidity reforms prior to their enactment were less likely to be bailed out in 2008.
Number of Pages in PDF File: 42
Keywords: breaking the buck, bailout, Dodd-Frank, DLA, exchange rate stabilization fund, Financial Stability Oversight Council (FSOC), guarantees, liquidity, money market mutual funds, Primary Reserve Fund, regulation, SEC, Securities and Exchange Commission, U.S. Treasury, WAL, WAM, WLA
JEL Classification: G01, G18, G22, G23, G28, H12, H81, L5
Date posted: January 2, 2013 ; Last revised: August 29, 2015