* Review based on filings from 341 prime money funds
* Most support predates 2010 rule changes
* Adds fuel to debate over new regulations
By Ross Kerber
BOSTON, Aug 13 (Reuters) - Sponsor support likely kept at least 21 money market funds from "breaking the buck" during the financial crisis, the Federal Reserve Bank of Boston found in a study issued on Monday, adding fuel to a debate over the need for additional regulations.
The study's authors reviewed filings from 341 prime money market funds from 2007 to 2011 and found at least 21 that received support worth more than 0.5 percent of their assets. That amount was large enough to suggest that, without it, the funds would not have been able to maintain the $1 per share net asset value investors expect, they wrote.
The study authors said that "Such support, which has served to obscure the credit risk taken by these funds, has been a common occurrence over the history" of money funds.
The study comes as regulators, including Boston Fed President Eric Rosengren push for new rules to make the funds more resilient. Industry executives have pushed back, saying new rules adopted in 2010 by the U.S. Securities and Exchange Commission have done plenty to shore up the funds and that additional changes would have unintended consequences.
With $2.7 trillion under management at July 31, money funds play a key role in the financial system. Past studies have shown dozens of funds received support during the crisis, but not in as much detail.
A spokeswoman for the fund industry's main trade group, the Investment Company Institute, said leaders were not immediately available to comment on the Fed study on Monday afternoon. Some executives have said the support given to the funds before the 2010 reforms is not central to the current debate.
The Fed's study offered some evidence for that argument. Much of the cash and securities purchases made by sponsors to shore up their funds was needed to cover defaulted structured investment vehicles in the funds and obligations to the collapsed investment bank Lehman Brothers, prior to the 2010 changes.
Lehman obligations led to one of the biggest fund missteps during the crisis, when the well-known Reserve Primary Fund failed to maintain $1 per share. Government backstops shored up other funds afterward, but those have since expired.
In an interview, study co-author Steffanie Brady acknowledged much support described in the paper stemmed from problems in 2007 and 2008. But she said the weaknesses remain and that the 2010 reforms "have not been fully tested." None of the SEC's changes would have precluded funds from buying Lehman securities, she added.
In all the study found at least 78 money funds received some type of direct support in the form of cash contributions or purchases of distressed securities at above-market prices. In all, the support totaled $4.4 billion.
Sponsors that provided support included well-known fund companies such as Northern Trust Corp, T. Rowe Price Group Inc, Bank of New York Mellon Corp and the Western Asset Management unit of Legg Mason Inc.