New York Fed Revises TALF Compliance, Eligibility Terms
11 März 2009 - 2:43PM
Dow Jones News
A week before the Federal Reserve of New York launches its
program to boost the asset-backed securities market, the central
bank revised compliance terms for participating investors and
refined definitions on the securities eligible for the program.
The Term Asset-Backed Securities Loan Facility, commonly known
as TALF, is one of several programs initiated by the Fed to help
stabilize financial markets and stimulate lending. Through TALF,
the Fed will extend one-year loans that will be secured by
newly-created bonds backed by auto, credit card, student and small
business loans. The bonds must have the highest triple-A
rating.
The revisions issued Wednesday include compliance requirements
on inspection and recourse if collateral is found ineligible,
refined definitions of prime and subprime as it relates to auto
asset-backed securities and refined eligibility criteria for bonds
backed by dealer inventories.
The New York Fed said auto loan and lease-backed bonds will be
considered prime if the weighted average FICO score of the
receivables is 680 or greater. The FICO score is a number assigned
to depict the credit quality of the borrower.
Receivables without a FICO score are assigned the minimum FICO
score of 300 for this calculation, the Fed said on its Web
site.
Credit card asset-backed securities are considered prime if at
least 70% or more of the receivables have a FICO score greater than
660. FICO scores must reflect performance data within the last 120
days.
The program is set to launch on March 17 as the bank begins to
accept applications for loans. The bank will begin disbursing funds
on March 25.
More information on the revisions can be found on the New York
Fed's Web site, http://www.newyorkfed.org/.
-By Anusha Shrivastava, Dow Jones Newswires; 201-938-2371;
anusha.shrivastava@dowjones.com