The Federal Reserve will take its Term Asset-Backed Securities Loan Facility off the drawing board and into the market on March 17. TALF will provide financing to investors to encourage the purchase of AAA-rated asset-backed securities comprising auto, credit card, student and SBA-guaranteed loans. The Federal Reserve bank of New York will lend up to $200 billion to qualified issuers and investors under the program, which the Fed hopes will generate as much as $1 trillion in lending.
Community banks are enthusiastic about the effort. Camden R. Fine, president and chief executive officer of the Independent Community Bankers of America, says his member “are well-positioned to help in the recovery efforts by extending lending in cities and towns throughout America. ICBA believes the TALF will help community banks make even more loans by thawing the secondary market. TALF also will help fix banks’ balance sheets by restarting the securitization market, says Kevin Conn, financial market equity analyst at MFS Investment Services.