[NVDave]

TARP was just the “tip of the iceberg.”

The scare on Wall Street went into high gear after Lehman collapsed, but it went into sheer hysteria when a money market fund, known as “Reserve Primary Fund,” with holdings of about $65B, marked their NAV (net asset value) to $0.97 as a result of the Lehman implosion. Lehman sold a lot of corporate short-term debt, which had been bought up by various money market funds in the past.

Now, some additional information on Reserve Primary Fund: It’s the nation’s oldest money market fund. By “breaking the buck” (ie, going below $1.00 NAV), Reserve Primary caused a stampede out of money market funds into short-term Treasury debt at a breathtaking pace between September 15 to 16, 2008.

By Friday, Sep. 19, 2008, the Treasury was guaranteeing retirement funds in MMF’s up to $250K, and stood ready to stopgap up to $50B of MMF’s for losses.

And then the bailouts really got going, with TARP and all manner of Fed asset-swap programs.

Now, why is Bernanke running his gob about MMF’s today? I think this has something to do with it:

http://www.reuters.com/article/2012/03/29/reserve-sec-idUSL2E8ETAM120120329

I think some dirty laundry is about to be aired.

[Son House]

Instead, Reserve Primary became the second money fund to fall below $1 per share, known as "breaking the buck," when its share price dropped to 97 cents on Sept. 16, 2008.

The fund had held $785 million of Lehman debt. Its collapse was a key driver of the credit market seizure that followed Lehman's demise. New regulations have since reduced the credit and maturity risks that money funds may take.

There's a clue here...