Program Purpose and Overview
The Term Asset-Backed Securities Loan Facility (TALF) is a joint Federal Reserve-Treasury program that was designed to restart the asset-backed securitization markets (ABS) that had ground to a virtual standstill during the early months of the financial crisis.
The ABS markets historically have helped to fund a substantial share of credit to consumers and businesses. The consequences of these markets coming to a standstill were many: limited availability of credit to households and businesses of all sizes, an unprecedented widening of interest rate spreads, sharply contracting liquidity in the capital markets and a potential to further weaken U.S. economic activity.
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Key Facts
- TALF is a joint program between Treasury and the Federal Reserve designed to restart the asset‐backed securitization markets that provide credit to consumers and small businesses.
- TALF’s goal was to support the consumer and business credit markets by providing financing to private investors to help unfreeze and lower interest rates for auto loans, student loans, small business loans, credit cards, and other consumer and business credit.
- The program closed to new lending on June 30, 2010. As of December 31, 2011, the balance of outstanding TALF loans was $9 billion, and Treasury estimates that taxpayers will earn a positive lifetime return of $430 million through the program.