On November 25, the Federal Reserve Board announced that in an attempt to reduce mortgage-interest rates it would begin purchasing up to $500 billion in mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae and up to $100 billion in direct debt obligations of Fannie Mae, Freddie Mac and the Federal Home Loan Banks. The purchases will take place over the next several quarters.

Additionally, the Federal Reserve Board and the U.S. Department of the Treasury announced the creation of the Term Asset-Backed Securities Loan Facility (TALF) which is intended to help consumers and small businesses obtain credit by promoting the issuance of asset-backed securities (ABS) backed by student loans, auto loans, credit card receivables and certain small business loans. The facility eventually may be expanded to include securities backed by commercial mortgage loans, non-agency residential mortgage loans or other assets, but at this time such assets are not covered. More information on the TALF is available in a Katten Client Advisory published December 1.