Tuesday, March 3, 2009
Feds Offer $1 Trillion In Loans
Here's your chance to get a part of President Obama's economic stimulus plan.
The Treasury Department and the Federal Reserve are offering up to $1 trillion in loans for businesses and households. The hope is that the Term Asset-Backed Securities Loan Facility, or TALF as they are calling it (everything in government has initials) will help small businesses and students get loans. As the parent of two college age students, I, for one, am all ears.
The money won't go directly to you and me. The TALF is designed to provide financing to investors to support their purchases of AAA-rated asset-backed securities. Apparently there are initials to describe this as well: ABS (not to be confused with the automatic brakes systems on our cars, but I digress).
The TALF was established, we are told by Treasury and the Fed, because the ABS market, which has historically been a critical component of lending in the financial system, have been virtually shuttered since the worsening of the financial crisis in October. The hope is that by reopening these markets, lenders will begin offering money to consumers and small businesses, helping to stimulate the broader economy.
Of course, there are more than just murmers of discontent among many Americans over the way this economic downturn is being managed by the government. Anger over billions of dollars in bailout money (issued during the Bush administration but supported by then President-elect Obama) that was not used to stimulate lending as hoped have soured many on the president's stimulus plan. But the TALF is designed to encourage lending to Main Street and to families. If it works, it should go a long way to making life a little bit easier for cash-strapped Americans. It should also help garner greater support for the president's economic recovery efforts.
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Photo credit: http://www.flickr.com/photos/twcollins/751221191/