Toxic assets program slowly building steam

The Federal Reserve wants to loosen up credit by ridding banks of toxic assets, but its premier program to do that, Term Asset-Backed Securities Loan Facility (TALF), got off to a very slow start in March. Interest in the program shot up in May, up by 145 percent from March, with investor demand for loan money totaling $11.5 billion.

Ultimately, if TALF is successful, investors will use the Fed loans to buy up troubled commercial mortgage backed securities, but investors are not quite ready for that step. Right now, they're choosing to purchase primarily credit card ($6.2 billion of TALF funds) and car loans ($3.3 billion of TALF funds). This should free up money for credit card and auto lending.


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