Treasury's Secretive ESF-Funded $2.4 Trillion Mutual Fund Guarantee

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Linus Wilson, an assistant professor of finance at the University of Louisiana at Lafayette, recently obtained data about the program from the Treasury, through a Freedom of Information Act request.

The data from the Treasury show that taxpayers were backing in excess of $2.4 trillion through the mutual fund program. Hundreds of funds participated in the program, amounting to almost 99 percent of the total money-market mutual fund assets.

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Despite the enormous size of the guarantees, the Treasury collected only $1.2 billion in fees from the participating funds. By Wilson's calculation, most participating funds paid just 0.04 percent, or 4 basis points, for a year's worth of insurance.

Treasury used $50 billion from an account set aside for exchange rate stabilization to fund the program. Those funds can be spent at the Treasury Secretary's discretion--even when it takes a pretty creative logical leap to connect the expenditures to exchange rates.