Fed, Treasury Aid Money Market Funds

The salesman said his clients, the funds, were selling assets this week to meet the redemptions, but have slowed down as they try to understand the government's as yet undefined plan.

Not only that, many money market funds held Lehman paper and have had to suffer writedowns. Lehman tried last weekend to find a merger partner, but when it couldn't, the investment bank filed for bankruptcy protection.

Meanwhile, other fund families were taking pains to list money market funds' exposure to various companies that have been worrying the market of late. Fidelity detailed its money market funds' exposure to AIG(AIG Quote), Merrill Lynch (MER Quote), Morgan Stanley (MS Quote) and Goldman Sachs (GS Quote) in hopes of calming investors.

Columbia Cash Reserves Fund, a retail money market fund, said it held $400 million of Lehman securities. Columbia is a division of Bank of America(BAC Quote).

Wachovia(WB Quote) stepped in to help its Evergreen money market funds, stating that "a decline in the value of the Lehman debt will not result in a decrease in the net asset value of the Evergreen money market funds." One Evergreen fund had a $300 million exposure to Lehman.

The Treasury Department said concerns about the net asset value of money market funds falling below $1 have "exacerbated global financial market turmoil and caused severe liquidity strains in world markets."

Putnam representative Sinead Martin couldn't comment on the government's fund plan, saying only that, "at this time, we are awaiting further details of the Treasury's new program to support the money-market mutual-fund sector."