TALF Expected to Help Commercial Real Estate Market

The federal government recently launched the Term Asset-Backed Securities Loan Facility program (TALF), a $200B program to buy up bad debt and spur lending for credit cards, education, autos, and other consumer loans. Under the program, the Fed will buy securities backed by different types of debt.

If successful, TALF will help revive the economy by unfreezing the market and making it easier for Americans to finance large and small purchases at lower rates, according to Federal Reserve Chairman Ben Bernanke.

The program, created and announced by the Fed and the Treasury Department late last year, has the potential to generate up to $1 trillion of lending to businesses and households. And although it won’t be a part of the official rollout, it will eventually expand to the commercial real estate market. TALF will begin by providing $200 billion in loans to investors with the goal of jump-starting lending to consumers and small businesses.

Any participants of the program, which will consist of mostly companies and investors, must pledge eligible collateral to back the loans and make loan requests by March 17, 2009. The Fed plans to keep the program running though December 2009, but says that it could be extended.

Source: AP