The latest data on the Talf — the US governments plan to kick-start credit by encouraging investors to borrow money from the Fed to invest in bonds backed by car loans, credit cards, etc. — is rather lacklustre. The total amount borrowed was $5.4bn in July — down from $11.5bn in June and $10.6bn in May.
The programme started in March.
It certainly doesn’t bode well for the CMBS portion of the Talf, which is due to start again next week after no one applied in time for the first deadline of June 16.
This was what the New York Federal Reserve president had to say about the programme:
New York Fed President William Dudley set expectations low, saying in a June 4 speech that he didn’t anticipate any activity [on June 16] because the securitization process “takes quite a while to ramp up.” He asked his audience not to “take that as a mark of the success of the CMBS effort, please.” That securitisation is even more important given that S&P is threatening to downgrade billions of dollars worth of CMBS. Talf-eligable CMBS must have at least two triple-A ratings from the major agencies, so S&P’s actions are something of a SNAFU for the CMBS market.
Related links:
CMBS deja vu – FT Alphaville
CMBS snafu – FT Alphaville
A formula to fix – FT