Government Funds Consumer ABS Lending Facility and Will Buy GSE Obligations and MBS
The Treasury Department and Federal Reserve announced two significant initiatives today to bolster lending in the financial markets.
First, the Treasury Department announced it will use $20 billion in TARP funds to assist the Federal Reserve in establishing a $200 billion lending facility for consumer assets and related asset-backed securities. The program's goal, known as the Term Asset Backed Securities Loan Facility, or TALF, is intended to increase liquidity for financial institutions providing small business loans, credit cards, as well as automobile and student loans. Click here for the Federal Reserve's TALF term sheet.
Separately, the Federal Reserve announced it would purchase up to $100 billion in direct obligations of Fannie Mae, Freddie Mac and the Federal Home Loan Banks. The Federal Reserve would also purchase up to $500 billion in Fannie Mae, Freddie Mac and Ginnie Mae mortgage-backed securities. Click here for more information.
