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Advanced Search About the Fed News & Events Monetary Policy Supervision & Regulation Payment Systems Economic Research Data Consumers & Communities Board of Governors of the Federal Reserve System The Federal Reserve, the central bank of the United States, provides the nation with a safe, flexible, and stable monetary and financial system. Home > News & Events > Press Releases Press Release October 05, 2009 Federal Reserve announces changes to procedures for evaluating asset-backed securities pledged to the Term Asset-Backed Securities Loan Facility (TALF) For immediate release Share The Federal Reserve Board on Monday announced two changes to the procedures for evaluating asset-backed securities (ABS) pledged to the Term Asset-Backed Securities Loan Facility (TALF). The TALF, which was authorized by the Board on November 24, 2008, helps market participants meet the credit needs of households and businesses by lending to investors in highly rated ABS and commercial mortgagebacked securities (CMBS). First, the Federal Reserve Board announced that it has proposed a rule that would establish criteria for the Federal Reserve Bank of New York to determine the Nationally Recognized Statistical Rating Organizations (NRSROs) whose ratings are accepted for determining the eligibility of ABS to be pledged as collateral at the TALF. A Notice of Proposed Rulemaking, attached, will be published in the Federal Register for public comment. The proposed rule, which would require a certain minimum level of experience in rating deals of any particular type, would likely result in an expansion of TALF-eligible NRSROs for ABS. It is intended to promote competition among NRSROs and ensure appropriate protection against credit risk for the U.S. taxpayer. Second, starting with the November subscription, in addition to continuing to require that collateral for TALF loans receive two triple-A ratings from TALF-eligible NRSROs, the Federal Reserve Bank of New York will conduct a formal risk assessment of all proposed collateral-ABS in addition to CMBS, which are already subject to a formal risk assessment. The change to the collateral review process will enhance the Federal Reserve's ability to ensure that TALF collateral complies with its existing high standards for credit quality, transparency, and simplicity of structure. To facilitate the risk assessment, each issuer wishing to bring a TALFeligible ABS transaction to market will be required to provide, at least three weeks prior to the subscription date, information including, but not limited to, all data on the transaction the issuer has provided to any NRSRO. Instructions and timelines for issuers of ABS as well as a statement of principles describing the standards guiding the risk assessment of TALF collateral, attached, are available on the Federal Reserve Bank of New York's website. Issuers of ABS complying with the TALF terms and conditions and the statement of principles may reasonably expect an indication of acceptability based on the Federal Reserve Bank of New York's risk assessment at least one week before the applicable subscription date. Federal Register notice: HTML | 74 KB PDF Frequently asked questions Terms and conditions Risk assessment principles (10 KB PDF) Last Update: October 05, 2009 BOARD OF GOVERNORS of the FEDERAL RESERVE SYSTEM About the Fed News & Events Monetary Policy Supervision & Regulation Payment Systems Economic Research Data Consumers & Communities Financial Stability TOOLS AND INFORMATION Contact Publications Freedom of Information (FOIA) Office of Inspector General Budget & Performance | Audit No FEAR Act Español Website Policies | Privacy Program Accessibility STAY CONNECTED BOARD OF GOVERNORS of the FEDERAL RESERVE SYSTEM 20th Street and Constitution Avenue N.W., Washington, DC 20551
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