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
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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
Overview
- 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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