FED published additional information regarding borrower and collateral eligibility criteria for the Term Asset-Backed Securities Loan Facility (TALF). FED also outlined the information it will publicly disclose for the TALF and the Paycheck Protection Program Liquidity Facility (PPPLF) on a monthly basis. FED will disclose the name of each participant in both facilities; the amounts borrowed, interest rate charged, and value of pledged collateral; and the overall costs, revenues, and fees for each facility. The disclosures are similar to those announced in April for FED facilities that utilize CARES Act funds.
TALF was announced on March 23 as part of an initiative to support the flow of credit to U.S. consumers and businesses. This credit facility is intended to help meet the credit needs of consumers and businesses by facilitating the issuance of asset‐backed securities and improving the market conditions for asset‐backed securities. TALF will serve as a funding backstop to facilitate the issuance of eligible asset‐backed securities on or after March 23, 2020. Under the TALF, the Federal Reserve Bank of New York will commit to lend to a special purpose vehicle on a recourse basis. TALF will initially make up to USD 100 billion of loans available. The loans will have a term of three years; will be non-recourse to the borrower; and will be fully secured by eligible asset‐backed securities. No new credit extensions will be made after September 30, 2020, unless TALF is extended by FED and the Department of the Treasury.
Eligible collateral includes U.S. dollar denominated cash asset‐backed securities that have a credit rating in the highest long‐term or, if no long‐term rating is available, the highest short‐term investment‐grade rating category from at least two eligible nationally recognized statistical rating organization. It should not have a credit rating below the highest investment‐grade rating category from an eligible nationally recognized statistical rating organizations. With the exception of commercial mortgage‐backed securities, small business administration pool certificates, and Development Company Participation Certificates, eligible asset‐backed securities must be issued on or after March 23, 2020. To be eligible collateral, all or substantially all of the underlying credit exposures must be newly issued, except for commercial mortgage‐backed securities.
Eligible collateral must be asset‐backed securities where the underlying credit exposures are of auto loans and leases; student loans; credit card receivables (both consumer and corporate); equipment loans and leases; floor-plan loans; premium finance loans for property and casualty insurance; certain small business loans that are guaranteed by the small business administration; leveraged loans; or commercial mortgages.
Keywords: Americas, US, Banking, Term Asset Backed Securities Loan Facility, TALF, PPPLF, CARES Act, Small Business Administration, Credit Risk, Asset Backed Securities, COVID-19, FED
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
The Office of the Superintendent of Financial Institutions (OSFI) published an update on the discussion paper that intended to engage federally regulated financial institutions and other interested stakeholders in a dialog with OSFI, to proactively enhance and align assurance expectations over key regulatory returns.
The European Commission (EC) published a report summarizing responses to the targeted consultation on the supervisory convergence and the single rulebook in the European Union (EU).
The European Central Bank (ECB) published its opinion on a proposal for a regulation on European green bonds, following a request from the European Parliament.
The Advisory Scientific Committee (ASC) of the European Systemic Risk Board (ESRB) published a report that explores the expected impact of digitalization on provision of financial and banking services, and proposes policy measures to address the risks stemming from digitalization.
The Hong Kong Monetary Authority (HKMA) is consulting on the draft Financial Institutions (Resolution) Ordinance (Cap. 628), or FIRO, Code of Practice chapter on liquidity and funding in resolution, until March 14, 2022.
The Swedish Financial Supervisory Authority (FI) announced that the capital adequacy reporting as at December 31, 2021 must be done by February 11, 2022.
The European Banking Authority (EBA) announced that the guidelines on the reporting and disclosure of exposures subject to measures COVID-relief measures shall continue to apply until further notice.
The Central Bank of the Philippines (BSP) issued communications covering developments related to online lending platforms, open finance framework and roadmap, and on the expected regulations in the area sustainable finance.
The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.
The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).