TALF

Federal Reserve Bank of New York Announces First Subscription Date for New Loan Facility

 

On May 20, the Federal Reserve Bank of New York announced the first loan subscription date for the Term Asset-Backed Securities Loan Facility (TALF). The TALF was established to increase availability of credit and support consumers and businesses by assisting the issuance of asset-backed securities. Borrowers may request one or more three-year TALF loans on the monthly scheduled loan subscription date, beginning with the upcoming first loan subscription date of June 17. Release.

Federal Reserve Announces New Efforts to Stabilize U.S. Economy

 

On March 23, the Federal Reserve announced several new measures it will take in an effort to support and stimulate the economy during the COVID-19 pandemic. The Federal Open Market Committee will purchase Treasury securities and agency mortgage-backed securities (including commercial mortgage-backed securities). Several new credit facilities will be established to support the flow of credit – the Primary Market Corporate Credit Facility (PMCCF), the Secondary Corporate Credit Facility (SMCCF) and the Term Asset-Backed Securities Loan Facility (TALF). Certain existing credit facilities will be expanded to include additional securities – the Money Market Mutual Fund Liquidity Facility (MMLF) and the Commercial Paper Funding Facility (CPFF). The Federal Reserve also announced plans to create a Main Street Business Lending Program to facilitate lending to small businesses. Release.

TALF Reduces Credit Protection

On July 21, the Fed announced that Treasury will reduce the credit protection provided for TALF from $20 billion to $4.3 billion. The Fed had authorized up to $200 billion in TALF loans, but when the program closed on June 30, there were $43 billion in loans outstanding. The TALF FAQs and Terms and Conditions have been revised accordingly. Fed Press Release. Revised FAQsRevised Terms and Conditions.

Fed Rule for Eligibility of Rating Agencies for TALF

On December 4, the Fed adopted a final rule establishing a process for determining the eligibility of rating agencies to issue ratings on ABS, other than those backed by commercial real estate, to be accepted as collateral for TALF. The criteria include: (i) registration as an NRSRO with the SEC and (ii) experience rating the types of assets accepted as collateral for TALF. The final rule is substantively the same as the proposed rule announced on October 5 and will take effect with the February 2010 TALF subscription. Fed Release. Final Rule.