On March 3, 2008, the Federal Reserve Bank of New York (FRBNY) released an Operation Announcement with respect to its Term Asset-Backed Securities Loan Facility (TALF). The TALF is designed to help market participants meet the credit needs of households and small businesses by supporting the issuance of asset-backed securities (ABS) collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration (SBA).

The settlement date for the first round of TALF loans is March 25, 2009. Requests for TALF loans to be funded on that settlement date were to have been submitted by March 17, 2009, but the window for submitting first subscriptions for funding has been extended through 5:00 p.m. EDT on March 19, 2009. Monthly subscriptions for loans will be scheduled on the first Tuesday of every month thereafter.

The FRBNY also released revised Terms and Conditions for the TALF, along with a revised set of Frequently Asked Questions, on March 3, 2009. The significant clarifications or changes to the TALF announced on that date include:

  • Sponsors of ABS-eligible collateral for TALF loans will not be subject to the executive compensation restrictions that are applicable to entities receiving funds under the Troubled Asset Relief Program;

  • Interest rates and haircuts on TALF loans secured by ABS backed by federally guaranteed student loans and SBA loans were reduced;

  • Details are provided on the required calculation of the expected life of TALF-eligible collateral.

The TALF Frequently Asked Questions were revised on March 11, 2009. Significant clarifications or changes announced on that date include:

  • A statement that there should be "every expectation" that a borrower will receive a requested loan if eligible collateral is posted.

  • Revised requirements with respect to SBA loan ABS, relating to issuer certifications, indemnity undertakings, and auditor review of SBA loan receivables.

To obtain a TALF loan, a borrower, acting through a primary dealer in government securities as agent, must enter into a Master Loan and Security Agreement (MLSA) with the FRBNY. The MLSA contains provisions that describe TALF loan processes and procedures, loan repayment requirements, and the remedies available to the FRBNY as to pledged collateral. Click here to read a summary of some relevant MLSA provisions.

Visit the FRBNY Web site to see the Terms and Conditions and Frequently Asked Questions, and to view certain ancillary TALF documents, including the MLSA, Form of Auditor Attestation, Certification of TALF Eligibility, and Form of Indemnity Undertaking.

If you have any questions concerning the TALF, please contact the co-chairs of the Economic Stabilization and Recovery Initiative:

Dominic J. De Simone, (215.864.8704; desimone@ballardspahr.com)
Thomas A. Hauser, (410.528.5691; hauser@ballardspahr.com)

Prior TALF Alerts

February 17, 2009
Term Asset-Backed Loan Facility - Federal Reserve Announces Additional Terms and Possible Expansion

January 6, 2009
Federal Reserve Announces Additional Details for its Term Asset-Backed Securities Loan Facility (TALF)

November 26, 2008
Federal Reserve and Treasury Announce Two New Programs to Boost Credit Availability

Prior EESA Alerts

February 17, 2009
Stricter Executive Compensation Limits for TARP Recipients

February 13, 2009
Treasury Secretary Outlines New Financial Stability Plan

February 4, 2009
Significant New Restrictions on Executive Compensation for TARP Recipients

January 27, 2009
Special Inspector General of TARP to Begin Oversight Initiative

January 16, 2009
Treasury Department Issues Term Sheet and Announces February 13, 2009 Deadline for Subchapter S Corporations to Participate in the Capital Purchase Program

January 6, 2009
Federal Reserve Announces Additional Details for its Term Asset-Backed Securities Loan Facility (TALF)

December 12, 2008
Treasury Department Issues Closing Documents for Private Financial Institutions to Participate in the Capital Purchase Program

December 1, 2008
SEC Staff Issues Sample Guidance to CPP Participants Filing Proxy Statements

November 26, 2008
Federal Reserve and Treasury Announce Two New Programs To Boost Credit Availability

November 18, 2008
Treasury Department Issues Term Sheet and Announces December 8, 2008 Deadline for Private Financial Institutions to Participate in the Capital Purchase Program

November 14, 2008
Kashkari Details Future TARP Deployment Strategy

November 12, 2008
Treasury Secretary Details TARP Strategy 

November 7, 2008
Treasury Department Announces Solicitation Regarding Asset Management Services in Connection with EESA Capital Purchase Program

November 6, 2008
Beware: Is There a "Trojan Horse" in the Capital Purchase Program Securities Purchase Agreement?

October 23, 2008
Kashkari Testifies Before Senate Banking Committee

October 14, 2008
Treasury, Federal Reserve, and FDIC Joint Statement Capital Purchase Program

October 13, 2008
Remarks on TARP to Institute of International Bankers

October 7, 2008
Emergency Economic Stabilization Act of 2008/TARP

October 6, 2008
Employee Benefits and Executive Compensation Issues Connected to Emergency Economic Stabilization Act of 2008

October 6, 2008
Emergency Economic Stabilization Act of 2008


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