X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

WASHINGTON, DC-Lending operations under TALF (the Term Asset-Backed Securities Loan Facility) is beginning today, the Treasury Department has announced. Introduced by the Bush Administration last year and since refined under Secretary Geithner, TALF will immediately support purchases of consumer loan-backed asset securities and then be expanded to include commercial and residential backed mortgages. All together it has the potential to generate up to $1 trillion of lending, according to Treasury.

This first wave of capital–or first funding as Treasury is calling it–will be the $200-million facility that was first introduced last year. The Federal Reserve Bank of New York will be lending that amount to eligible owners of AAA-rated ABS backed by newly and recently originated auto loans, credit card loans, student loans, and SBA-guaranteed small business loans. Subscriptions for funding in March will be accepted on March 17. On March 25, those new securitizations will be funded. The program will hold monthly fundings through December 2009 or longer if the Federal Reserve Board chooses to extend the facility.

Securities backed by rental, commercial, and government vehicle fleet leases, and securities backed by small ticket equipment, heavy equipment, and agricultural equipment loans and leases will be eligible for the April funding of the TALF.

One of the complaints about Geithner’s announcement last month regarding his expansion of TALF was that the plan was woefully lacking in details. The Treasury Department has also released additional details about the program.

Today the Treasury Department says that private-label residential mortgage-backed securities, collateralized loan and debt obligations, ABS backed by mortgage-servicer advances are also under consideration to be included in TALF.

Also, with the exception of securities that are fully guaranteed by the SBA, TALF eligible securities must have received two AAA ratings from the major rating agencies; furthermore none of the major rating agencies can have rated the security below AAA or placed the security on watch for downgrade. Also, each ABS issuer must hire an external auditor to certify that all information conveyed to the rating agencies about the ABS is correct, and that the ABS meets the TALF eligibility requirements.

Treasury also released the amounts it expects private investors to supply in risk capital as well as loan rates.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.