US Treasury steps in to backstop money market fund

WASHINGTON, Nov 20 (Reuters) - The U.S. Treasury said on Thursday it will buy up to $5.6 billion in securities from The Reserve Fund's U.S. Government Fund to aid the money market fund's liquidation under a federal guarantee program.

Under the "extraordinary" action, the Treasury said it will become the buyer of last resort for the fund's assets, purchasing them at amortized cost to ensure that each shareholder receives $1 for each share they own.

The funds will come from the Exchange Stabilization Fund, which the Treasury tapped in September to launch a guarantee program for money market mutual funds. (Reporting by David Lawder, Editing by Chizu Nomiyama)