The Federal Reserve Board and the Treasury Department today approved an extension to the Term Asset-Backed Securities Loan Facility (TALF).
The government agencies also stated that they do not anticipate any further additions to the types of collateral eligible for the facility.
According to the release from the two agencies, even with conditions in the financial markets improving significantly in recent months, the markets for ABS backed by consumer and business loans and for CMBS are still considered impaired and seem likely to remain so for some time.
To promote the flow of credit to businesses and households and to facilitate the financing of commercial properties, both government agencies approved extending TALF loans against newly issued ABS and legacy CMBS through March 31, 2010.
Also, considering that CMBS deals can take considerable time to arrange, both agencies also approved TALF lending against newly issued CMBS through June 30, 2010.
According to the a release from both government agencies, the board will continue to monitor financial conditions and will see whether "unusual and exigent" circumstances necessitate the extending TALF to help promote financial stability and economic growth.
The Federal Reserve and Treasury had previously authorized TALF loans through Dec. 31.
After having conducted a thorough analysis of a number of potential candidates, the Federal Reserve and Treasury announced on Monday that, for now, they are not further expanding the types of collateral eligible under TALF.
The securities that are now eligible for collateralizing TALF loans include the major types of newly issued, triple-A-rated ABS backed by loans to consumers and businesses, and newly issued and legacy triple-A-rated CMBS.
The Federal Reserve and Treasury might reconsider their decision if financial or economic developments demonstrate that offering TALF financing to investors' acquisitions of added types of securities is needed.