The Federal Reserve Bank of New York will have the authority to make rules that could expand the number of credit rating agencies working with the Term Asset-Backed Securities Loan Facility under a proposal released by the central bank Monday.
When the Fed established Talf last November, it initially accepted collateral only if it won investment-grade ratings from two of three rating agencies — Standard & Poor's, Moody's Investors Service and Fitch Rating. Though the Fed is not weakening its requirements, its move would allow collateral to be evaluated by other rating agencies. The change would apply to Talf transactions stemming from asset-backed securities other than commercial real estate.
