SOURCE: Simba Information

Simba Information

March 04, 2009 10:10 ET

TALF Does Not Address the Most Pressing Issue Facing Consumer Lending

STAMFORD, CT--(Marketwire - March 4, 2009) - Simba Information reports that has announced the addition of TowerGroup's new report "Can TALF Save US Consumer Lending, or Have Forces Already Killed the Goose That Laid the Golden Egg?," to their collection of Banking & Financial Services market reports. For more information, visit

The establishment of the Term Asset-Backed Securities Loan Facility (TALF) by the US Treasury and Federal Reserve Board does not fully address the most pressing issue facing consumer lenders: a prospective lockdown in lending.

TALF does not address lenders' anxiety about the source of their funding and the flexibility of their portfolio management, especially regarding recent changes to rules and legislation.

Proposed rule changes by the Financial Accounting Standards Board (FASB) would repatriate billions of dollars of credit card debt onto issuer balance sheets, effectively changing the character of the US credit card industry indefinitely. Proposed changes by the Federal Reserve Board and legislation before both houses of Congress could inhibit pricing flexibility and reconfigure the risk profile of US consumer lending.

However benevolent US Treasury Secretary Henry Paulson's motivation in establishing the TALF, its size as initially configured is dwarfed by the size of the outstanding asset-backed security (ABS) market.

One positive provision of TALF is its limitation to one year its loans to investors, which could boost institutional confidence in instruments that governments and regulators create to lessen the effects of the global financial crisis.

Report Coverage
A Day Late and a Dollar Short
      Exhibit 1
      Exhibit 2
FASB, the Fed, and Congress
      Exhibit 3

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