FED Prepared to Prop Up Money Market Funds

This article by Neil Irwin discusses the Federal Reserves new program to provide cash to money- market mutual funds. Mutual-funds invest by lending money on a short-term basis to companies, banks and other financial institutions. They are normally considered safe places to park cash because they only buy debt that us highly likely to be paid back. Government official hope that this measure will help ensure that lending remains available to banks.

This program is yet another safety net for the financial system. More government intervention to prevent and even steeper fall of the economy. The FED is not only willing to lend money directly to banks but also ready to back up their funds in the future.