A New Loan Liquidity Facility by ProQuest


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A New Loan
By Paul Merski


C     ommunity bankers may have
      yet another financial relief
program acronym to remember:
                                                           Small Business Administration
                                                           (SBA) community bank lenders,
                                                           the Federal Reserve and Treasury
                                                                                                 backed by consumer loans, the
                                                                                                 facility will allow more institutions
                                                                                                 to step up their lending and enable
TALF. The Term Asset-Backed                                Department announced the pro-         borrowers to have access to lower-
Securities Loan Facility will extend                       gram in November 2008 and             cost consumer finance and small
up to $200 billion in nonrecourse                          began implementing the TALF in        business loans.
loans to holders of high-quality                           February 2009. Unless the pro-
asset-backed securities derived of         Paul Merski     gram is extended, the TALF will       How the TALF Works
consumer and small business loans       is ICBA senior     cease making new loans on Dec.        The TALF is a Federal Reserve
to help reinvigorate the frozen          vice president,   31, 2009.                             Bank of New York facility that
asset-backed securities market. The    chief economist.       The consumer asset-backed          is structured to lend using high-
Treasury Department is providing          Reach him at     securities market is an important     grade collateral held by securi-
$20 billion in Troubled Asset Relief     paul.merski@      source of liquidity to financial      tizers. Under the TALF, the
Program (TARP) funds to support                icba.org.   institutions that provide federally   New York Fed makes loans to
the initiative.                                            guaranteed small business loans       issuers of asset-backed securi-
   Following ICBA requests for    
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