The Federal Reserve Board clears up and revises the aspects of the Term Asset-Backed Securities Loan Facility (TALF). After consultation with asset-backed securities (ABS) investors, dealers and issuers were determined terms including extension of the TALF loan maturity from one to three years and additional specification of eligible ABS collateral.
To deliver more certain investor access TALF loans will be provided to all eligible borrowers with eligible collateral rather than distributed through an auction.
The Board authorized the TALF on 24 November 2008 under section 13(3) of the Federal Reserve Act. The TALF is designed to increase credit availability and support economic activity by facilitating renewed issuance of consumer and small business asset-backed securities (ABS).
Under the TALF, the Federal Reserve Bank of New York will finance the purchase of eligible ABS by investors. The TALF will finance only certain newly issued, highly rated ABS collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration.
L.D.