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Financial Times – The US Federal Reserve will launch its financing ­programme, worth up to $1,000bn, for consumer and business loans in the coming days, amid concerns that hedge funds might find it difficult to take advantage of the scheme.

The programme – the term asset-backed securities loan facility (Talf) – is the cornerstone of the US authorities’ push to jump-start the credit market. Officials at the central bank say it will be up and running by the end of this month.

Fed and Treasury officials say this is an essential complement to efforts to repair the banking system. The idea is to boost the supply of new credit-card loans, student loans and car loans by providing low-cost finance to investors who buy these loans bundled up as securities in the secondary market.

But the Talf relies on private-sector investors being willing and able to take advantage of the financing the Fed makes available.

Consultations have revealed potential obstacles to participation. The most significant of these are limits on the ability of investors who use Talf finance to buy an asset to transfer the loan when they sell it.

An asset sold with low-cost three-year financing attached would command a higher price than an asset that had to be financed in distressed private markets at the point of sale.

Moreover, most hedge funds do not have permanent capital so they have to consider the risk that redemptions could force them to sell the assets before the three years are up.

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Tags: asset backed securities, banking system, business loans, car loans, consultations, cornerstone, credit card loans, federal-reserve, financial times, loan facility, obstacles, point of sale, private markets, private sector investors, redemptions, securities loan, student-loans, treasury officials, us-federal-reserve

FierceFinance – The government is committed to keeping the wheels of consumer credit greased. To that end, it has launched a $200 billion effort to support the market for consumer receivables. 

The Fed announced it will "offer low-cost three-year funding to any U.S. company investing in securitized consumer loans under the Term Asset-backed Securities Loan Facility (TALF)," reports the Financial Times. 

"This includes hedge funds, which have never been able to borrow from the U.S. central bank before." The TALF will likely be expanded to cover mortgage-backed securities next year. We’ll have to see if this really adds liquidity to the secondary markets.

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Tags: asset backed securities, consumer credit, consumer loans, consumer receivables, financial times, liquidity, loan facility, mortgage backed securities, s-central, secondary markets, securities loan, u s company, wheels

domain-B – Hedge funds will be allowed to borrow from the Federal Reserve for the first time under a landmark $200-billion programme intended to support consumer credit.

The new programme is aimed at injecting credit for consumers and small businesses including auto loans and credit cards will be launched in February.

The Fed said on Friday it would offer low-cost three-year funding to any US company investing in securitised consumer loans under the Term Asset-backed Securities Loan Facility (TALF). This includes hedge funds, which have never been able to borrow from the US central bank before.

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Tags: asset backed securities, auto loans, borrowers, consumer credit, consumer loans, consumers, credit-cards, eligible collateral, federal-reserve, interest-rate, landmark, loan facility, new-york-fed, securities loan, small businesses