TARP's Term Asset-Backed Securities Loan Facility: Can Wall Street Help Main Street?


On November 25, 2008, the Treasury and the Federal Reserve Board announced the creation of the Term Asset-Backed Securities Loan Facility, or TALF. The TALF was created to improve lending to consumers and small businesses by providing liquidity to securities backed by credit card debt, student loans, auto loans and small business loans guaranteed by the Small Business Administration. In announcing the program, the Treasury and the Federal Reserve Board noted that the $240 billion annual asset-backed securities market that funds the consumer lending covered by the TALF had essentially come to a halt in October.

The TALF may, in the future, be extended for purchase of mortgage-related assets. In the interim, the Federal Reserve Board (Federal Reserve) also announced on November 25, 2008 that it will purchase direct debt obligations of Fannie Mae, Freddie Mac and the Federal Home Loan Banks as well as mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae.

TALF is part of the Treasury’s Troubled Assets Relief Program and is modeled after other programs launched by the Federal Reserve to facilitate resumption of more normalized extensions of credit and economic activity. Please see our coverage of these coordinated efforts and the current financial crisis at Financial Crisis Legal Updates and News.

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