WASHINGTON -- The U.S. Treasury Department announced a massive program Friday to shore up the nation's money-market mutual-fund sector, responding to concerns that the global financial crisis is starting to affect those historically safe assets.

In addition, the Federal Reserve is expanding its liquidity programs, which should help money funds meet redemption demand. The initiative includes purchasing certain short-term debt obligations issued by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks.

Under...