The SEC has temporarily banned short selling of 799 financial stocks, and the Treasury Department has said that it would guarantee (temporarily?) money market funds up to the amount of $50 billion. The New York Times called this move “startling” because money market funds have long been considered one of the safest investments — about as safe as a savings account.
From the NYT:
“We have acted on a case-by-case basis in recent weeks, addressing problems at Fannie Mae and Freddie Mac, working with market participants to prepare for the failure of Lehman Brothers, and lending to A.I.G. so it can sell some of its assets in an orderly manner,” Mr. Paulson said.
“Despite these steps, more is needed,” he said. “We must now take further, decisive action to fundamentally and comprehensively address the root cause of our financial system’s stresses.”
President Bush admitted that taxpayer money was funding these “decisive actions,” but did add that he expected the money to be paid back:
“These measures will require us to put a significant amount of taxpayer dollars on the line,” Bush said in a statement, “But we expect that this money will eventually be paid back.”