The Federal Reserve and Treasury have extended the Term Asset-Backed Securities Loan Facility program until June 2010. The previous deadline had been the end of 2009.
The Federal Reserve explained in a press release on Monday that, “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.”
The asset-backed securities will only run until March 2010. But, because the commercial mortgage-backed securities take months to work out, they were extended until June 2010.
The Fed made certain to clarify that, while “unusual and exigent circumstances” may arise, prompting a further extension, they do not intend to add any more time.
The TALF extension was likely in response to a direct request from a group of Congressmen, sent over two weeks ago. Bloombergreported, “41 House members…signed a July 31 letter to Bernanke seeking a one-year extension through December 2010 and asking for a decision by mid-August.”
MarketWatch noted that TALF “has helped provide more credit for auto loans, student loans and commercial real estate loans, which had nearly dried up in the private sector.”
The Fed says that “they do not anticipate any further additions to the types of collateral that are eligible for the facility.” In other words, the only debts that will receive help under the extension are those that fit the types of debts already specified.
So far, TALF funds have totaled around $30 billion of debt, according to The New York Times.
While some argue that there are already signs that the economy is moving toward recovery, however, Editor Adam Lass of Taipan Publishing Group’s WaveStrength Options Weekly points out that the recovery is being propelled almost entirely by government money. He says, “The question to ask is: What’s the ‘second act?’ Where will the government spend money next to keep the ball rolling?”
Adam notes that the Obama administration is keeping a watchful eye on the housing market, and he believes that housing will pull through, because the administration is determined to pull it through – no matter the true cost. Adam’s so confident that the government will do whatever is necessary, that he’s put his money where his mouth is: He’s set up a portfolio for his readers that can benefit from the government’s interference. Learn here what this portfolio includes and how you could profit from this government-backed recovery effort.
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