In an attempt to get credit flowing to the commercial real estate market, the Federal Reserve plans to extend to five years the terms for certain loans under its Term Asset Backed Securities Loan Facility (TALF) program, according to a report in Friday's The Wall Street Journal. Under the TALF program, the Federal Reserve provides loans that are used to buy bonds backed by credit card payments, auto debt and student loans. The TALF loans from the Fed have previously been for three years, but will now be offered for five years for loans to purchase bonds backed by commercial real estate holdings, according to The Journal.
The TALF program aims to restart the frozen secondary market — and lower rates — for several key areas of the credit market. Without an active secondary market, banks are less likely to make loans because they are forced to keep the loans on their balance sheets.
