Barclays U.S. Federal Support for Credit Markets Brief


Barclays Capital

  • Schecky Schechner, Managing Director, Head of U.S. Real Estate Investment Banking
  • 24 pages
  • Confidential
  • March 27, 2009


TALF – Overview
Term Asset-Backed Securities Loan Facility (TALF)

  • Announced November 25, 2008
  • The government’s objective is to lend up to $1 trillion to revive the Asset Backed Securities (ABS) market and consumer lending
  • On March 3rd, the Federal Reserve announced it is prepared to expand eligible collateral to include newly issued AAA CMBS collateral (“TALF 2.0”)
  • On March 23rd, further expansion plans announced, to include “legacy” AAA-rated RMBS / CMBS as eligible collateral (“TALF 3.0”)
  • TALF was officially launched on March 17th
  • TALF will stop lending on December 31st, 2009


PPIP Overview
Public – Private Investment Program (PPIP)

  • On March 23rd, PPIP was launched in an effort to facilitate the injection of new capital into the market
  • Primary Objectives
  • Facilitate price discovery
  • Re-start lending and restore liquidity through unlocking capital
  • Two programs
  • Legacy Loans Program: FDIC and Treasury will establish Public-Private Investment Funds (“PPIFs”) to cleanse bank balance sheets of distressed loans and other assets
  • Legacy Securities Program: Federal Reserve and Treasury will establish PPIFs to address troubled securities


Legacy Loans Program

  • Banks Identify pools of loans to be sold
  • FDIC, banking regulators and Treasury determine eligible assets
  • FDIC determines amount it is willing to finance, up to 6-to-1 leverage
  • FDIC will conduct an auction for the pools

– The highest bidder will have access to 50% of the equity funding by the Public-Private Investment Fund

  • PPIFs created with 1:1 equity contribution from private investors and the Treasury
  • Private partners retain asset management control
  • The government receives interest on money lent and shares profits and losses on the equity portion



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