Reviving Lending to Small Businesses and
Families and the Impact of the TALF
The COP May Oversight Report is called Reviving Lending to Small Businesses and Families and the Impact of the TALF. This report looks at the state of lending for small businesses and families and then examines the Term Asset-Backed Securities Loan Facility (TALF), which Treasury and the Federal Reserve established to improve access to credit for families and small businesses by supporting the issuance of asset-backed securities collateralized by credit card loans, student loans, auto loans and loans guaranteed by the Small Business Administration (SBA).
Credit has tightened for families and small businesses. Over 40 percent of banks report tightening lending standards for small businesses. In February, 2009, consumer lending fell by an annual rate of 3.5 percent. If successful, TALF could improve access to lending for families and small businesses. The report raises two critical questions about the TALF:
- Is the TALF program well-designed to help market participants meet the credit needs of households and small businesses?
- Even if the program is well-designed, is it likely to have a significant impact on access to credit?
The report finds that there is reason for caution in predicting the ultimate impact of TALF, though the program may succeed in improving investor demand for asset-backed securities.