TALF isn’t looking too hot

July 7, 2009

The Federal Reserve just released the latest loan applications from investors wanting to tap the TALF lending facility to buy asset-backed securities, and it’s, well, disappointing. Loan applications totaled just $5.4 billion – not exactly the kind of number that inspires confidence that this program will reinvigorate consumer lending.

In June, loan applications totaled $11.5 billion and in May, $10.6 billion. Sure it could be the summer doldrums at work, but this program has been plagued from the start. First, its initial launch date in February was delayed and then the first round of applications in March was a meager $4.7 billion as investors worried participation could involve future meddling from lawmakers, among other concerns.

Next up, loan applications to buy legacy commercial mortgage-backed securities are due July 16. Let’s hope that goes better or it will be hard not to be pessimistic about TALF and the outlook for securitization.

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