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The New York Federal Reserve said on Thursday that investors had requested $4.7 billion in the first round of its consumer and small business lending program, far below the $200 billion on offer.
Investors requested $1.9 billion of loans to buy securities backed by auto loans and $2.8 billion for loans to buy credit card asset-backed securities.
There was no demand for loans for securities backed by student or small business loans in the March 17-19 subscription period for the first round of the Fed's Term-Asset Backed Securities Loan Facility, known by its acronym TALF.
The U.S. central bank had pledged to lend up to $200 billion in this month's round and said eventually the program could grow to $1 trillion.
Federal Reserve Expands TALF Lending Program
The U.S. Federal Reserve also expanded its consumer and small business lending program to include securities backed by mortgage servicing advances and floor-plan loans in April.
The Fed also opened lending under its Term Asset-Backed Securities Loan Facility, or TALF, to securities backed by loans or leases relating to business equipment and leases of vehicle fleets, as expected.
TALF is part of the Fed's massive infusion of cash into markets to revive lending and help pull the economy out of a painful recession.
The new categories of collateral will be eligible for the next TALF funding. Subscriptions for the first TALF offer are being accepted on Thursday and will be settled on March 25.
A number of additional asset classes are under review for possible further expansion, the Fed said on Thursday.
Mortgage servicing advances are loans made by residential mortgage servicers to cover payments missed by homeowners.
Accepting securities backed by those advances should help prevent foreclosures, the Fed said in a statement.
The TALF is intended to jump-start securitization markets that have collapsed since the bursting of the U.S. housing bubble forced a large number of mortgages into default.
In the March TALF funding, the Fed pledged to lend up to $200 billion to support securities of new and recently originated auto, credit card, student and small business loans.
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