Term Asset-Backed Securities Loan Facility Update

This article was originally published 16 January, 2009

As previously announced, on December 19, 2008, the Federal Reserve Board issued revised terms relating to its Term Asset-Backed Securities Loan Facility ("TALF"). Under the TALF, the Federal Reserve Bank of New York ("FRBNY") will make up to $200 billion of non-recourse loans available to eligible borrowers to enable them to purchase certain asset-backed securities ("ABS"). Hedge funds and other investment vehicles may borrow under the TALF so long as they satisfy the eligibility requirements. It is expected that the TALF will be operational in February 2009. The TALF will cease making new loans on December 31, 2009 unless it is extended by the Federal Reserve. Below is a summary of the TALF and certain related federal income tax considerations.