Term Asset-Backed Securities Loan Facility
Date:
November 25, 2008
Policy Area:
Financial Sector Policy
Economic Target:
Financial Institutions
Action Type:
Loans
Maximum Amount:
$720.00 billion
Amount Spent:
$0.55 billion Lending facility officially offers up to $1 trillion (originally set at $200 billion, but raised to $1 trillion on 2/10/2009 by the Obama administration) in liquidity to financial institutions that buy financial securities backed by small business loans, consumer lending for automobiles, students, credit cards and activities, as well as securities backed by loans on heavy machinery like agricultural equipment and car rental fleets. The Treasury Department has offered $100 billion in credit protection to the facility.
Part of TALF's funding is also part of the Public-Private Investment Program, run in conjunction with the Treasury's TARP funds (see companion TARP PPIP entry) and the FDIC (see companion FDIC PPIP entry), to help banks attract private investment for distressed bank loans and illiquid securities.
On April 20, 2009, Treasury Secretary Geithner released a letter stating that Treasury's "projected allocation" to TALF (via TARP funds) would be $80 billion dollars: $20 billion of this amount would support the original asset classes announced at the program's inception, $35 billion would support the expanded class of assets announced on March 19, 2009, and $25 billion would go to the purchase of legacy securities within the Public-Private Investment Program. TALF has an unofficial maximum lending capacity of ten times its TARP credit protection (i.e, an $80 billion in credit protection would yield $800 billion in maximum lending capacity).
On August 17, 2009, the Treasury and the Federal Reserve released a letter stating that TALF loans will be made available through 3/31/2010, extending the program from the previous 12/31/2009 termination date.
Notes:
Maximum amount is the Fed's total exposure: $800 billion in loans minus $80 billion in credit protection from the Treasury. Amount spent indicates outstanding loans as of 1/16/2013 (http://www.federalreserve.gov/releases/h41/Current/). Activities of the Federal Reserve are not directly recorded in the federal budget. However, each year the Federal Reserve remits a portion of its earnings to the general treasury. This remittance is generally in the range of $20-$30 billion per year, but the CBO estimates that the Fed's earnings will be lower by approximately $90 billion over the next ten years.