The Term Asset-Backed Securities Loan Facility (TALF) program announced March 3 by the Federal Reserve and Treasury is an effort to free up the frozen secondary market for credit cards, auto loans and small business loans.
The TALF, which will receive $20 billion in support through Treasury’s Troubled Asset Relief Program (TARP), will allow the Federal Reserve and Treasury to extend up to $200 billion in nonrecourse loans to holders of high-quality asset-backed securities that are backed by consumer and small business loans.
“Community banks are common-sense lenders that did not participate in the activities that led to the current economic crisis, but they are well-positioned to help in the recovery efforts by extending lending in cities and towns throughout America," said Camden Fine, president and CEO, Independent Community Bankers of America (ICBA).
The consumer asset-backed securities market is an important source of liquidity to community banks that make federally guaranteed small business loans and consumer loans, such as auto loans, student loans, credit cards and SBA loans. By providing liquidity to issuers of consumer asset-backed paper, the Federal Reserve facility will enable more community banks to continue to step up lending and provide their customers with access to lower-cost consumer financing and small business loans.
For more information about the TALF, see www.federalreserve.gov.
The Independent Community Bankers of America represents nearly 5,000 community banks of all sizes and charter types throughout the United States. For more information, visit www.icba.org.
For information about Connecticut Community Banks (ICBA members) visit www.ctcba.com/members/members.aspx.
