The TALF Gets Real

The TALF gets real. Shares of Ford were trading up on word that Ford planned to issue a $2.95 billion bond backed by auto receivables is an indication that the Term Asset-Backed Securities Loan Facility (TALF) is finally becoming real.

Investors will be able to get a loan from the TALF program to invest in the offering.

Nissan also announced a $1.5 billion deal on Tuesday.

The TALF program's deadline for the first round of funding bids is due Thursday.

We know that the government will issue low-cost loans for investors to buy asset-backed securities like car loans and credit card receivables.

There's little doubt that other companies, like CarMax , will soon be coming forward with their own bond proposals; potentially even insurance companies could be beneficiaris.

What will the Fed do today? Expect them to talk about the TALF, and while I have heard many voices calling for them to expand the project (already at $1 trillion), it's seems more likely they will want to give it time to work.

The other alternative—buying long-term Treasuries—seems premature. Traders cite the success of the UK government buying gilts. They are buying about 20 percent of the outstanding debt in the UK. But doing something even close to that in the U.S. Treasury market (about $6 trillion) would be a tall order indeed.

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Questions? Comments?