TALF Off To So-So Start

The Federal Reserve program to lend investors $200 billion to buy student loan, credit card, small business and auto loan debt is off to a so-so start. The Fed is counting on TALF (Term Asset-Backed Securities Loan Facility) to help get the battered credit markets out of the intensive care unit.

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The New York Federal Reserve received $4.7 billion in loan requests for this first round of TALF (March 14-19). $2.8 billion of that was in credit card debt. The rest was in auto loans.

"This is a good start for a program that we will continue to build on in the future," said Federal Reserve Bank of New York President William C. Dudley in a press release. "Our goal is to get the securitization market working again."

But a number of observers had hoped to see a stronger debut. You have to wonder if TALF's underwhelming debut has something to do with the public flogging AIG, Merrill Lynch and others have endured in recent weeks. Hedge fund managers we've spoken to have expressed growing unease about doing business with the government, especially if exposes them to public scrutiny of their business practices and compensation regimes.

The next round of TALF is scheduled for the second week of April.

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