UPDATE 1-Federated would consider buying 'super SIV' debt

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NEW YORK, Oct 17 (Reuters) - Federated Investors Inc (FII.N) has been involved in discussions to put together a fund designed to prevent the forced sale of billions of dollars of assets, and there is a good chance Federated would invest in short-term debt the fund issued, a Federated official told Reuters on Wednesday.

The three largest U.S. banks said on Monday they are setting up a pool meant to prevent investment funds known as structured investment vehicles (SIVs) from having to sell off assets.

Federated has been involved in talks to put this fund together, and assuming the fund is set up as currently envisioned, Federated would hope to buy some of its short-term debt, said Deborah Cunningham, chief investment officer for taxable money markets.

"Our intent is to support it," she said, adding that the short-term debt would still be subject to Federated's usual process for reviewing potential investments.

With the new pool offering support to SIVs, their funding troubles should dissipate and they should not have to sell assets, Cunningham said.

The new pool would issue commercial paper only if it had to buy assets from an SIV that need funding, Cunningham said. If the new pool worked as planned, it would not have to issue commercial paper, she added.

Federated invests in SIV debt, Cunningham said. The Pittsburgh-based investment company had about $165 billion of taxable money market assets as of June 30. (Reporting by Dan Wilchins)