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Analyze This: The TALF

The Federal Reserve has launched an eagerly awaited program aimed at boosting the availability of credit to consumers and small businesses.

The Fed will lend up to $200 billion to spur consumer lending -- for autos, education, credit cards and other financing. The bold program, dubbed the Term Asset-Backed Securities Loan Facility or "TALF," was first announced late last year and originally scheduled to start in February. The money will be used to provide financing to investors to buy up the debt.

Participants -- companies and investors that pledge eligible collateral to back the loan -- must request the new government loans by March 17. The Fed will provide the three-year loans on March 25.

The Fed said the program has the potential to generate up to $1 trillion of lending for businesses and households.

Will it work?

Joe LaVorgna, Deutsche Bank chief U.S. economist is skeptical. “At the margin it will help,” he says on Fast Money. “But it’s a Band-Aid. The problem with this TALF is that it’s all about new issue,’ he says. “The banking system is clogged by bad assets which the TALF does not address.”

“We’re tackling the problems from the side. We need something bigger and bolder,” he concludes.

LaVorgna has a lot of say about the TALF. For more please watch the video.



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