FED Updates Terms for Asset-Backed Securities Loan Facility
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.
Related Links
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
Previous Article
PRA Finalizes Approach to Supervising Liquidity and Funding RisksRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.