The Term Asset-Backed Securities Loan Facility (TALF) will extend up to $200 billion in nonrecourse loans to holders of high-quality asset-backed securities derived of consumer and small business loans to help reinvigorate the frozen asset-backed securities market. The Treasury Department is providing $20 billion in Troubled Asset Relief Program funds to support the initiative. Following ICBA requests for a new liquidity facility to help Small Business Administration community bank lenders, the Federal Reserve and Treasury Department announced the program in November 2008 and began implementing the TALF in February 2009. Unless the program is extended, the TALF will cease making new loans on Dec 31, 2009. Under the TALF, the New York Fed makes loans to issuers of asset-backed securities that have the highest investment-grade rating from at least two nationally recognized statistical rating organizations.
w a s h i n g t o n A New Loan Liquidity Facility By Paul Merski ICBA ADvoCATeD LAUNChINg New “TALF” PRogRAm 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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