There were $811 million in requests for funds linked to purchase ABS backed by auto loans and $897 million for those backed by credit card loans, but that's it. There have been requests for neither loans to buy ABS backed by student loans nor ABS backed by small business; and furthermore, the program was extended to include ABS backed by equipment, floorplan, and mortgage servicing advances, which also received no takers.
This is a very slow start. Bloomberg cites the following as hindering the program:
- TALF investors are subject to a provision in February’s $787 billion fiscal-stimulus law that makes it tougher for recipients of federal bailout funds or Fed emergency loans to hire skilled workers from abroad.
- John Ryding (founder of RDQ Economics LLC in New York ) said the coming expansion of the TALF to include older, distressed mortgage securities will be more important than the first phase, which only includes newly issued securities tied to consumer and business loans.
- Weaker consumer demand for credit could also be limiting demand for TALF deals. The pace of borrowing by U.S. consumers fell in February. (this is what I initially argued).