The U.S. Treasury Department and the Federal Reserve on Tuesday launched a much-awaited program aimed at boosting the availability of credit for consumers and small businesses.
The program, dubbed the Term Asset-Backed Securities Loan Facility (TALF), has the potential to generate up to 1 trillion U.S. dollars of lending for businesses and households, the Treasury and the Fed said in a joint statement.
"The TALF is designed to catalyze the securitization markets by providing financing to investors to support their purchases of certain AAA-rated asset-backed securities (ABS)," the statement said.
These markets have historically been a critical component of lending in the U.S. financial system, but they have been virtually shuttered since the worsening of the financial crisis in October, the statement said.
"By reopening these markets, the TALF will assist lenders in meeting the borrowing needs of consumers and small businesses, helping to stimulate the broader economy," it said.
Under the program, the Fed will lend up to 200 billion dollars to eligible owners of certain AAA-rated ABS new auto loans, credit card loans, student loans, and SBA (small business administration)-guaranteed loans.
The program will hold monthly funding through December 2009 or longer if the Fed chooses to extend the facility, the statement said.
For the current month, participants must request loans by March 17 and the Fed will provide them on March 25.
The TALF program was first announced late last year and was originally scheduled to start in February.
(Xinhua News Agency March 4, 2009)