Investors applied for a total of $6.5 billion in loans from the Federal Reserve through their Term Asset-Backed Securities Loan Facility (TALF) emergency lending program. The TALF program provides low interest loans to investors for purchasing securities backed by auto, credit card and other types of consumer loans. This round, purchases include $4.4 billion in credit-card backed loans and $1.16 billion in auto loans.
Around $14.7 billion in eligible asset-backed securities were sold by American Express, Bank of America, General Electric, Nissan, Ford, and GMAC Inc.’s Ally Bank this round.
In August, $6.9 billion was borrowed and $5.4 billion was borrowed in July by Investors through the TALF program.
The TALF program essential subsidizes investor’s purchases of these assets through artificially low interest rates and non-resource structure, Fed takes bulk of the loss if loan goes bad.
CNNMoney.com – Investors Apply for $6.5 Billion in Loans
Reuters – Investors Requested $6.4 bln under Fed
Financial Times – Fed lends $6.5bn for securities buys
AP – Banks borrow more from emergency Fed loan program