Federal Reserve Chairman Ben Bernanke, in a speech to the National Press Club on February 18, stated that the Term Asset-Backed Lending Facility (TALF) would begin shortly. Specifically, Bernanke said, “the Federal Reserve and the Treasury have jointly announced [the TALF program], expected to be operational shortly, that will lend against AAA-rated asset-backed securities collateralized by recently originated student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration. Last week, in conjunction with the Treasury, we announced that we were prepared to expand significantly this facility... to encompass other types of newly issued AAA-rated asset-backed securities, such as commercial mortgage-backed securities and private-label mortgage-backed securities, as well. If this program works as planned, it should lead to lower rates and greater availability of consumer, business, and mortgage credit.”
As part of ongoing efforts to provide documentation standards for the TALF, the Federal Reserve Bank of New York later released the “TALF Master Loan and Security Agreement” on February 18, a “Form of Certification as to TALF Eligibility” on February 19 and a “Form of Auditor Attestation” on February 20.
The recently expanded TALF program will provide up to $1 trillion in loans to purchasers of asset-backed securities, including securities backed by auto loans, student loans, credit card receivables, small business administration loans and commercial mortgage loans, and possibly in the future, private-label residential mortgage loans and corporate loans. A Katten Client Advisory describes the TALF program in greater detail.