In August I posted on the danger that subprime mortgages pose to people who invest in money market funds. Today, the New York Times reports that several such funds have invested in commercial paper (CP) issued by Structured Investment Vehicles (SIVs) backed by subprime mortgage-backed securities (MBSs). I think all money market funds should start a public information campaign to let people know if they have the SIV virus and if so, what they're doing to protect their customers from it.

Earlier, I posted on all the new vocabulary words I've learned in the last year thanks to the subprime mortgage meltdown. This $1.3 trillion market consists of mortgages to people who can't afford to repay in many cases. Forty seven percent of the loans were made without documentation of the borrower's income -- these are known as liar loans. The subprime mortgages were packaged as MBSs and among the buyers were SIVs -- off-balance sheet entities that use a bank's good credit rating to issue CP to invest in MBSs.

Thanks to the subprime mortgage meltdown, the CP is not worth as much as before so the money market funds that bought it are now forced to break the $1 per share constant value or put money into the fund to make up for the lost value. So far, analysts say that most SIV securities are trading at 97 to 98 cents on the dollar. But if more SIVs are forced to unwind, the resulting fire sale would put pressure on prices.

Here's a list of money market funds and the amount that banks are putting in to bolster the buck:

• Merrill Lynch (NYSE: MER) will provide $300 million in support to an institutional cash fund and anticipates providing about that much to a group of Columbia Management retail funds.
• Bank of America (NYSE: BAC) plans to spend $600 million to prop up several Columbia Management funds, which bought large amounts of debt issued by structured investment vehicles, or SIVs, that is now worth less than it paid.
• Credit Suisse Group (NYSE: CS) booked about $125 million in unrealized losses after it bought notes issued by collateralized debt obligations and SIVs in its money market fund.
• Wachovia Corp. (NYSE: WB) said it had made a similar pre-emptive strike, recording a $40 million loss to buy distressed notes from its Evergreen money market fund.
• Legg Mason (NYSE: LM), SEI Investments (NASDAQ: SEIC) and Sun Trust Banks (NYSE: STI) have each secured letters of credit suggesting that they might be willing to lose money before investors in their cash funds do.

These banks are economically far better off investing the money to keep from breaking the buck. That's because the income they'll lose if people withdraw their funds exceeds the amount their putting in to keep those customers from bolting. But things could get worse. I don't know if the cost of propping up these SIV-laden money market funds would ever exceed the lost income from customers who depart.

But if I had money in these funds, I would pull it out and try to find ones that are SIV free. Unlike bank deposits, money market funds are not insured by the FDIC up to $100,000. I would not want to be the last one out.

I think all money market funds should make it much more obvious whether they are exposed to SIVs. If you know of money market funds that are SIV-free, please comment below.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.