In a recent announcement, Federal Reserve Chairman Ben Bernanke said that a consumer loan program that was created to stimulate lending to business and consumers alike is still needed despite the fact that many other emergency lending programs are beginning to shut down in the wake of economic recovery.
According to Bernanke, the program, which also was intended to make loans available to the trouble commercial real estate markets, is still an essential element in stimulus efforts. He said during the conference sponsored by the Congressional Black Caucus Foundation that, “an ongoing need still clearly exists.”
Federal Reserve member Kevin Walsh added during a Chicago speech that the work of scaling back such programs will be just as challenging as it was to instituted them in the first place.
“We are at a critical transition period, of still unknown duration, and we must prepare diligently for an uneven road race ahead,” said Walsh. “If policy is not implemented with skill and force and some sense of proportionality, the success of the overall endeavor could suffer.”
The Term Asset-Backed Securities Loan Facility (TALF) is at the very center of the Federal Reserve and President Obama’s efforts to revitalize the credit markets, a key part of broader economic recovery. The approved extensions on the program could generate up to $1 trillion in lending for households and businesses all the way into 2010.
In the first phase of TALF, the Federal Reserve was providing $200 billion in financing for new consumer loans. Yet, investors who have utilized the program have requested far less than that. Bernanke is quick to point that TALF was indirectly responsible for financing three million loans to American households minus credit cards. It also offered 400,000 loans for small businesses across the country.
The program has attracted 121 borrowers so far, including investors of all sizes, he said.
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