The Federal Reserve announced that it would extend the TALF--the Term Asset Backed Securities Facility. It was set to expire at the end of the year and there has been much anticipation of the Fed extending the program. Typically, the Fed seems to make such announcements 1-2 days after the FOMC meeting--partly to keep the credit facilities separate from the conduct of monetary policy per se and partly because the decision is made by the Federal Reserve board rather than the FOMC, though no doubt the regional presidents weighed in on the decision.
For newly issued commercial mortgage backed securities, the program has been extended to June 30, 2010, while for other asset-backed securities and CMBS issued before Jan 1, 2009 the program has been extended to March 1, 2010. The announcement is not that much of a surprise in substance, even if the timing is a bit of a surprise. Because the announcement did not come at the end of last week, some observers anticipated it to be made next month.
As some of the emergency liquidity provisions have dwindled for the lack of use, in part growing out of success, it is clear though officials remain concerned about the commercial real estate market and are not yet convinced, apparently, that the securitization machine is up and running again.
