Fed data shows 60% of TALF loans repaid
Federal Reserve data released Wednesday show more than 60% of the $71 billion lent through the Troubled Asset-Backed Securities Loan Facility has been repaid. The Federal Reserve Bank of New York in conjunction with the Treasury Department began lending through TALF in March 2009 to encourage the issuance of securities backed by privately originated loans to consumers and businesses and to improve the asset-backed securities market during the credit crisis. Under the program, the Fed issued nonrecourse loans with terms up to five years in an effort to increase the flow of credit to households and businesses at a time when most financial institutions had drying capital reserves. Lending was authorized through March 31 for all ABS-backed TALF loans and June 30 for loans with newly issued commercial mortgage-backed securities as collateral. According to the Fed disclosure as mandated by the Dodd-Frank Act, roughly $38 billion has been repaid to the government. The loans went to a wide variety of private and public investors funds. For instance, 10 investment management subsidiaries owned by BlackRock (BLK) managed $3.82 billion borrowed from TALF, including the BlackRock Mortgage Investors Fund and the BlackRock Term Asset-Backed Securities Opportunity Fund. Despite the majority of those loans maturing after 2012, all but $221.3 million worth of TALF loans managed by BlackRock have been repaid to the government, roughly 95%. Another four subsidiaries owned by Pacific Investment Management Co., which manages the world's largest mutual fund, managed $7.2 billion in TALF loans, including two of its distressed mortgage funds. Of the loans PIMCO managed, $2.4 billion has been paid back, roughly 33%. The largest single loan under TALF was a $1.56 billion payout to the California Public Employees' Retirement System on May 12, 2009. It was paid back on Sept. 1, 2010. Certain pre-existing CMBS could be held as collateral for a TALF loan, known as legacy CMBS. In March, the New York Fed settled $857 million in legacy CMBS in its last round of loan requests for a total of $12 billion settled since June 2009. The Treasury was prepared to use funds under the Troubled Asset Relief Program to cover any losses on TALF loans, but according to the Fed, no losses have been experienced. Write to Jon Prior.