(1888PressRelease)
March 14, 2009 - The Federal Reserve and the Treasury Department hope to revive the moribund market for so-called securitized lending, which until last year was central to providing consumer and business loans. Starting March 17, large investors including hedge funds and private-equity firms can obtain cheap credit from the Fed and use the money to buy newly issued securities backed by such loans.
The Fed, which announced the program's outlines in November in tandem with the Treasury, had already expanded the size of the program and on Tuesday further expanded its targets. Originally limited to backing securities for consumer and small-business loans, it now will also target securitized loans for heavy industrial equipment, agricultural-equipment leases and rental-car fleets. And the central bank sweetened some terms to draw investors and debt issuers. For instance, participants won't have to adhere to limits on executive compensation that apply to banks that accept bailout government money. Such restrictions were originally planned for some participants.
Much is riding on the initiative, known as TALF for Term Asset-Backed Securities Loan Facility. At the height of the credit boom, Wall Street issued more than $1 trillion a year of securities that were backed by consumer credit, and trillions more backed by mortgages. These markets sometimes called the shadow banking system because they operate outside traditional bank activity accounted for roughly 40% of all consumer lending before the financial crisis erupted last year. But the market dried up last year. Issuance of securities tied to consumer loans dropped to less than $8 billion in the final three months of last year.
"There has been somewhat of a collapse of the banking system, but an almost total collapse of the shadow banking system," said Jennifer Campbell, CEO at Shakleton White Associates in Seattle. She went on further to say "Given our reliance on the latter, we need to get that shadow banking system revived."
The Shakleton White Associates CEO continued by saying "You need a robust securitization market to reestablish a broad lending platform in the society," and she finished her speech by saying “I expect this plan to be successful at bringing investors back into these markets.”
Shakleton White Associates inventory analysts have long term proven financial, retail, manufacturing, wholesale, and distribution backgrounds. The mergers & acquisitions arm of Shakleton White Associates is a participant in all major bidding, thereby keeping abreast of all market bids and realizations. Shakleton White Associates works alongside industry leaders who recognize the dramatic need for major changes, with a passionate commitment to business growth. Providing a full range of integrated services and products simultaneously directed at producing strategically predetermined business and cultural results. We bring together a broad range of talent and resources with a passion for integrity, continuous improvement and the desire to make a difference. This results in prosperity for our customers, society and ourselves.
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