With news last week Tuesday that Primary Reserve Fund had "broken the buck", rumors started to fly in a very nervous market and, by Thursday morning of last week, financial institutions began to put in redemption requests by the hundreds of millions for their funds at money market mutual funds. In total, according to NyPo, $500 billion in redemption orders were sitting on the desks at money market fund offices that morning.
Only a quick injection into the system of $105 billion by the Fed prevented the redemptions from being exercised.
The injection of capital into the market was followed up by calls from Treasury Secretary Hank Paulson to major money market players like Bank of New York Mellon and State Street in Boston informing them that federal money was in the market and they should tell their clients the Feds would be back with a plan to stem the constriction in the credit market.
Had the redemption requests remained on the books, it would have resulted in a crash of the commercial paper market and would have forced a near industry-wide halt in money market fund redemptions.