The Federal Reserve Bank is preparing to relaunch a Great Recession-era program designed to loosen credit markets for businesses by providing incentives to investors.
The $100 billion Term Asset-Backed Securities Loan Facility (TALF) will launch June 17, according to an article in CFODive.com. The goal is to encourage lenders to provide business loans by making it attractive for investors to buy into bonds collateralized by the loans.
“TALF was a big part of the Fed’s effort to restore credit markets during the 2008 financial crisis, and analysts generally say it was a model of success,” writer Robert Freedman said. “It helped thaw credit without costing taxpayers money, and investors received returns as high as 48%.”
The timelines and terms of the program were released last month but are mainly of concern to investors who are interested in obtaining a federally backed loan to buy into a fund, Freedman explained. Each fund is backed by a targeted kind of credit, such as a loan, to help a business increase or upgrade its equipment.