TALF Overview
article by Structured Finance Association
In response to the economic dislocation brought on by the coronavirus pandemic, the Fed established TALF to support the flow of credit to consumers and businesses.
Today’s economic dislocation is primarily one of liquidity concerns brought by the pandemic, not arising from negative credit quality. Going into 2020, delinquency rates across ABS products were well within lower-to-average historical bounds, further supported by a strong economy and low interest rates helping consumers and businesses meet their financial obligations. However, the economic impacts of the COVID-19 crisis are acute, and the shutdown on extensive portions of our economy with the jarring spike in unemployment as a consequence will turn from a liquidity concern to one of credit concern. By supporting the ABS markets, the Fed can inject confidence and the liquidity needed to help our economy recover from this global health crisis.
SFA has published materials outlining the 2020 TALF program criteria as well as a matrix comparing the 2020 TALF program and asset & loan criteria to that of 2008.