Fed: TALF Bailout Program Gets Extended Until March of 2010

August 17, 2009 by · Leave a Comment
Filed under: Policy News 

Here is the first piece of commercial real estate bailout that I have been expecting.  In this AP news piece, they mention that the Term Asset-Backed Securities Loan Facility program has been extended to cover CMBS (Commercial Mortgage Backed Securities).  It mentions that that creating CMBS takes time and March 2010 is not that far off so we can either expect another extension or another program that would be more direct to the commercial mortgage industry to get the money more directly.

News (Associated Press):

The Federal Reserve has extended the length of a program intended to spur lending to consumers and small businesses at lower rates, but the central bank said it had no plans to expand the types of loans being made.

The Fed said Monday it was extending its Term Asset-Backed Securities Loan Facility through March 31 for most of the types of loans it makes. The program was scheduled to end on Dec. 31.

The TALF started in March and figures prominently in efforts by the Fed and the Obama administration to ease credit, stabilize the financial system and help end the recession. Under the program, investors use the funds to buy securities backed by auto and student loans, credit cards, business equipment and loans guaranteed by the Small Business Administration.

Commercial mortgage-backed securities, which were added to TALF in mid-June, were extended through June 30 because issuing new securities in that area “can take a significant amount of time to arrange,” according to a joint news release from the Fed and the Treasury Department.

The commercial real estate portion of the TALF is designed to boost the availability of such loans, help prevent defaults and facilitate the sale of distressed properties. Delinquency rates on commercial loans have doubled in the past year as more companies downsize and retailers close their doors, the Fed has said.

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