FED Extends TALF Fund

August 19, 2009
Matt Isleib

 

The Fed announced this week the extension of the Term Asset-Backed Securities Loan Facility of best known to the public as the TALF fund.

The TALF fund which was derived in a ‘think-tank’ episode to combat a frozen and severely wounded economic and financial market environment was set to expire at the end of the year. The Fed has extended the fund until March.

With the credit markets seizing up for not only mortgage loans but auto, consumer and student loans as well as small business loans the Fed rolled out the TALF fund with a backstop of $1 trillion. Designed to provide investors a low cost way to buy consumer and commercial loans so far has not proven all too effective. Consumers and small business are still finding it extremely difficult to obtain credit or financing. Of the $1 trillion pledged by the Fed to date about $29 billion has been lent out with proceeds from the program.

The TALF is there to help facilitate commercial mortgage lending as well and as the market for commercial real estate deteriorates rapidly lenders may look to the TALF a lot more in the coming months as the commercial real estate market may be the next shoe to drop.