In conjunction with the conclusion of each Federal Open Market Committee (FOMC) meeting, the Fed provides an immediate statement outlining any changes to their monetary policy. It takes three weeks for the Fed to release the more-detailed minutes of their meeting.
Here are a few interesting and important highlights from the minutes of the FOMC March 17-18 meeting (emphasis added): Read the rest of this entry »
The New York Federal Reserve Bank received $4.7 billion in funding requests for the first round of the Fed’s Term Asset-Backed Securities Loan Facility (TALF). Investors had until late last night to submit their loan requests.
The N.Y. Fed reported it had received $1.9 billion associated with auto loans, $2.8 billion linked to credit cards, yet none so far for student loans or small businesses: Read the rest of this entry »
As a component of Treasury Secretary Geithner’s Financial Stability Plan, the Federal Reserve and the Treasury Department launched the Term Asset-Backed Securities Loan Facility (TALF) today. Beginning on March 25, the program will create a new lending facility for up to $1 trillion in “auto loans, credit card loans, student loans, and SBA-guaranteed small business loans.”
“The TALF is designed to catalyze the securitization markets by providing financing to investors to support their purchases of certain AAA-rated asset-backed securities (ABS). These markets have historically been a critical component of lending in our financial system, but they have been virtually shuttered since the worsening of the financial crisis in October. By reopening these markets, the TALF will assist lenders in meeting the borrowing needs of consumers and small businesses, helping to stimulate the broader economy,” said the Federal Reserve and the Treasury Department in a joint press release today.
Nearly 24 hours after Treasury Secretary Timothy Geithner delivered what was supposed to be the Obama Administration’s comprehensive “Financial Stability Plan,” the overall consensus among market analysts, economists, and the media alike was that the address was regarded as an overall failure.
The stock market’s reaction to Geithner’s speech yesterday (the Dow dropped nearly 400 points) reflected a serious let down, brought on by the market’s anticipation for a plan of action. Instead, what we all got was a reminder of each problem the economy is facing, without any detailed strategies to fix them. The days leading up to the speech distorted the marketplace by providing a false sense of anticipation that fully-formed plans were ready to be put in place immediately.
It has already been a busy morning for the Fed, and a happy one for Americans who have been wondering when their government would create a plan to prop up Main Street. We posted a story earlier that detailed the Fed’s implementation of the TALF, a facility designed to increase consumer lending through easier access to credit. Today the Federal Reserve has also announced plans to purchase $600 billion worth of obligations and mortgage-backed securities (MBS) from mortgage giants Fannie Mae and Freddie Mac.
“This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally,” said the Federal Reserve in this morning’s press release.
In a major announcement made this morning, the Federal Reserve has begun to construct some relief for Main Street — finally! As credit conditions worsened in September and seemingly ground to a halt in October, consumers suddenly found themselves unable to pull credit from anywhere. The Fed announced this morning the creation of the Term Asset-Backed Securities Loan Facility (TALF) that will “lend up to $200 billion on a non-recourse basis to holders of certain AAA-rated ABS” to increase the issuance of debt designed to free up money for credit cards, auto loans, student loans, and small business loans:
The Fed hopes the plan will create liquidity in the market for securities backed by the receivables from such loans, which in turn would encourage originators of consumer loans to restart lending to individuals.
HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.
