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Securing Secured Finance: The Term Asset-Backed Securities Loan Facility

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Abstract

The asset-backed securities (ABS) market, by supporting loans to households and businesses such as credit card and student loans, is essential to the flow of credit in the economy. The COVID-19 pandemic disrupted this market, resulting in higher interest rate spreads on ABS and halting the issuance of most ABS asset classes. On March 23, 2020, the Fed established the Term Asset-Backed Securities Loan Facility (TALF) to facilitate the issuance of ABS backed by a variety of loan types including student loans, credit card loans, and loans guaranteed by the Small Business Administration (SBA), thereby re-enabling the flow of credit to households and businesses of all sizes. In this post, we describe how the TALF works, its impact on market conditions, and how it differs from the TALF that the Fed established in 2009.

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  • Elizabeth Caviness & Asani Sarkar, 2020. "Securing Secured Finance: The Term Asset-Backed Securities Loan Facility," Liberty Street Economics 20200807, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:88523
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    Cited by:

    1. Metrick, Andrew, 2022. "Market Support Programs: COVID-19 Crisis," Journal of Financial Crises, Yale Program on Financial Stability (YPFS), vol. 4(2), pages 179-219, April.

    More about this item

    Keywords

    COVID-19; coronavirus; pandemic; Federal Reserve; ABS; Term Asset-Backed Securities Loan Facility (TALF); asset backed securities;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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