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Press Release
May 19, 2009

Federal Reserve announces that certain highquality commercial mortgage-backed securities
will become eligible collateral under the Term
Asset-Backed Securities Loan Facility (TALF)
For release at 2:00 p.m. EDT
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The Federal Reserve Board on Tuesday announced that, starting in
July, certain high-quality commercial mortgage-backed securities issued
before January 1, 2009 (legacy CMBS) will become eligible collateral
under the Term Asset-Backed Securities Loan Facility (TALF).
The TALF is designed to increase credit availability and support
economic activity in part by facilitating renewed issuance of consumer
and business asset-backed securities (ABS) and CMBS. The Board
authorized the TALF on November 24, 2008, under section 13(3) of the
Federal Reserve Act. Under the TALF, the Federal Reserve Bank of
New York (FRBNY) has extended loans secured by triple-A-rated newly
issued ABS backed by certain consumer and business loans and
leases. On May 1, 2009, the Board announced it would expand the
range of acceptable TALF collateral to include newly issued CMBS
starting with the June subscription.
On March 23, 2009, the Federal Reserve announced that it would
evaluate extending the list of eligible collateral for TALF loans to include
certain legacy securities. The objective of the expansion is to restart the
market for legacy securities and, by doing so, stimulate the extension of
new credit by helping to ease balance sheet pressures on banks and
other financial institutions. Tuesday’s announcement marks the first

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addition of a legacy asset class to the list of eligible TALF collateral.
The CMBS market, which has financed approximately 20 percent of
outstanding commercial mortgages, including mortgages on offices and
multi-family residential, retail and industrial properties, came to a
standstill in mid-2008. The extension of eligible TALF collateral to
include legacy CMBS is intended to promote price discovery and
liquidity for legacy CMBS. The resulting improvement in legacy CMBS
markets should facilitate the issuance of newly issued CMBS, thereby
helping borrowers finance new purchases of commercial properties or
refinance existing commercial mortgages on better terms.
To be eligible as collateral for TALF loans, legacy CMBS must be senior
in payment priority to all other interests in the underlying pool of
commercial mortgages and, as detailed in the attached term sheet, meet
certain other criteria designed to protect the Federal Reserve and the
Treasury from credit risk. The FRBNY will review and reject as collateral
any CMBS that does not meet the published terms or otherwise poses
unacceptable risk.
Eligible newly issued and legacy CMBS must have at least two triple-A
ratings from DBRS, Fitch Ratings, Moody’s Investors Service, Realpoint,
or Standard Poor’s and must not have a rating below triple-A from any of
these rating agencies. More broadly, the Federal Reserve is formalizing
procedures for determining the set of rating agencies whose ratings will
be accepted for various types of eligible collateral in the Federal
Reserve’s credit programs.
The initial subscription date for TALF loans collateralized by newly
issued CMBS will be June 16, 2009. The subsequent subscription dates
for TALF loans collateralized by newly issued and legacy CMBS will be
announced in advance. The subscription date for loans collateralized by
all other ABS will remain toward the beginning of the month.
A new term sheet and a frequently-asked-questions document, specific
to legacy CMBS, are attached. Also attached are a revised term sheet
and frequently-asked-questions document for newly issued assetbacked securities and CMBS.
Term Asset-Backed Securities Loan Facility (Legacy CMBS): Terms and Conditions
Term Asset-Backed Securities Loan Facility (Legacy CMBS): Frequently Asked
Questions
TALF FAQs
TALF Terms and Conditions

Last Update: May 19, 2009

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BOARD OF GOVERNORS of the FEDERAL RESERVE SYSTEM
20th Street and Constitution Avenue N.W., Washington, DC 20551