On March 23, 2020, the Board of Governors of the Federal Reserve
System (the Federal Reserve) announced that it
will establish the Term Asset-Backed Securities Loan Facility (TALF
II), as part of a package of initiatives to mitigate the disruptive
effect of the coronavirus pandemic on the US economy. TALF II
is a credit facility, authorized under section 13(3) of the Federal
Reserve Act, through which the Federal Reserve Bank of New York
(the Reserve Bank) will commit to lend to a special purpose vehicle
(SPV), on a recourse basis, against certain types of asset-backed
securities (ABS) that satisfy specified eligibility criteria.
The SPV initially will make up to $100 billion of loans
available. The US Department of the Treasury (the US Treasury),
using the Exchange Stabilization Fund, will make a $10 billion
equity investment in the SPV, and the remaining $90 billion will
come from the proceeds of recourse loans from the Reserve Bank.
