House Committee Urges FRB to Allow Consumer Loans into TALF

The House Financial Services Committee urged the Federal Reserve Board ("FRB") to revise its recently established Term Asset-Backed Securities Loan Facility ("TALF") by expanding the scope of "eligible collateral" to include investment-grade securities that are backed by unsecured consumer loans.

In a letter to FRB Chair Jerome Powell, members of the House Financial Services Committee argued that TALF should reflect market changes since the implementation of previous versions of TALF, such as the increase in (i) consumer reliance on non-bank credit and (ii) non-bank lenders' and FinTech lending platforms' reliance on capital markets to obtain funding.

As previously covered, the FRB established TALF, among a series of other initiatives, to support the flow of credit to families and businesses during the COVID-19 pandemic. The FRB designed TALF to (i) increase the availability of credit to consumers and businesses, and (ii) enable the issuance of asset-backed securities backed by loans, such as student loans, auto loans or Small Business Administration (or "SBA") loans.