The Federal Reserve Board and the Treasury Department have approved an extension of the Term Asset-Backed Securities Loan Facility (TALF) beyond its original sunset date of Dec. 31.
‘Conditions in financial markets have improved considerably in recent months. Nonetheless, the markets for asset-backed securities (ABS) backed by consumer and business loans and for commercial mortgage-backed securities (CMBS) are still impaired and seem likely to remain so for some time," a joint statement says.
TALF loans against newly issued ABS and legacy CMBS can be extended through March 31, 2010. TALF lending against newly issued CMBS has been approved through June 30, 2010, "because new CMBS deals can take a significant amount of time to arrange."
The Federal Reserve Board says it will continue to monitor financial conditions in considering whether further extensions are warranted. The Fed and the Treasury additionally announced that they will not expand further the types of collateral eligible for TALF.
"The Federal Reserve and Treasury are prepared to reconsider their decision if financial or economic developments indicate that providing TALF financing for investors' acquisitions of additional types of securities is warranted," the statement says.
SOURCE: Federal Reserve