The top accountant at the Securities and Exchange Commission rushed out an accounting “clarification” today aimed at allaying a potentially huge fear among banks: that providing financial support to money market mutual funds could require that those funds appear on the bank balance sheets.

“[B]ank support of money market mutual funds generally does not result in a requirement to present the fund on-balance sheet,” the SEC’s Office of the Chief Accountant said in a release.

Money market funds, viewed as among the safest of investments for cash, strive to maintain a one-dollar-per-share value — a sacred practice that is essential to investor trust.

The dollar-per-share value is so sacred that sponsoring banks would normally shore up the funds. But, in an unsettling reminder of the subprime mortgage meltdown that triggered the current financial crisis, some banks apparently hesitated out of fear that supporting the funds might result in on-balance sheet accounting, prompting the SEC response.

Many money markets hold commercial paper and short-term debt from now-bankrupt Lehman Brothers, American International Group, and other troubled companies, putting those money markets at risk for falling below a dollar, and thus presenting negative consequences for banks were the funds to be brought onto the balance sheet.

Yesterday, for only the second time in history, a money market mutual fund “broke the buck,” as its shares fell below one dollar in value. The development was all the more stunning because the fund in question was the Reserve Primary Fund, considered the inventor of the money market funds.

In its release, the SEC noted: “To protect investors’ principal investment in these funds, sponsoring financial institutions can provide various types of financial support.”

“The Office of the Chief Accountant believes that on-balance sheet accounting for supported money market funds is not required if the sponsoring financial institution does not absorb the majority of the expected future risk associated with the money market fund’s assets, including interest rate, liquidity, credit and other relevant risks that are expected to impact the value of the money market fund assets.” However, the SEC added, its staff would expect adequate disclosure about the nature of the support provided.

The release said that, in an unusual case where supporting the fund did expose a bank to the majority of the expected future risk, the SEC would “encourage consultation” — apparently with the SEC — on how to present that information in financial statements.

The SEC’s announcement comes just two days after the Financial Accounting Standards Board released proposed revisions to FIN 46(R). That was the accounting interpretation that led many banks to fear that securitized loans might have to be put back on bank balance sheets if banks agreed to help homeowners who were in danger of defaulting on their loans. As a result, many banks hesitated as the subprime crisis snowballed.

Eventually, President George Bush and Treasury Secretary Henry Paulson signed off on a plan, written by the American Securitization Forum, that created guidelines for banks to rework the loans without putting them back on balance sheet. Many observers and experts said the plan broke current accounting rules, and the crisis prompted FASB’s rapid effort to rewrite FIN 46(R).