Tuesday, March 17, 2009

Details of the Term Asset-Backed Securities Loan Facility

K&L Gates has issued a very useful document describing the emerging details ouf how the Term Asset-Backed Securities Loan Facility (TALF) will fuction, and how financial institutions, including U.S. based investment companies, can participate.

The TALF is not part of the Troubled Asset Relief Program, but a joint public-private investment program dramatically expanded under Treasury's recently announced Financial Stability Plan. The TALF was expanded by Treasury and the Federal Reserve Bank to create incentives for market participants such as hedge funds and other investment companies to return to the securitization market, thereby unfreezing that market and allowing banks to resume functioning within it. The Financial Stability Plan calls for the expansion of the TALF facility up to $1 trillion for permitted investments, and TALF may be further expanded to include commercial mortgage-backed securities, private-label residential mortgage-backed securities, and other asset-backed securities.

K&L Gates' summary includes details on:

  • The mechanics of how the program will work;
  • Who is eligible to borrow under the program;
  • What loans are eligible under TALF;
  • What are acceptable forms of collateral; and
  • Recommended next steps.

The K&L Gates TALF summary is available to Forum members at:

The Term Asset-Backed Securities Loan Facility in Sharper Focus (password required)