from Marketwatch:
A new Federal Reserve program to encourage more consumer lending hit a speed bump Tuesday, with investor demand for cheap Fed financing to buy bonds backed by credit-card and auto-loan payments sinking more than 60% from the program's initial round last month.
Investors applied for $1.7 billion in loans to purchase asset-backed securities under the second installment of the Term Asset-Backed Securities Loan Facility, or TALF, the Federal Reserve Bank of New York said in an update to its Web site late Tuesday.
That's down from $4.7 billion in requests during the program's first round last month. It also falls short of the $3.3 billion in TALF-eligible bonds companies brought to market Tuesday.
The gap between the amount of bonds sold and requests for Fed financing for these bonds suggests some investors chose not to use the Fed's attractive loan rates to purchase asset-backed securities.
That reluctance may stem from fears the federal government would impose restrictions on institutions that use bailout programs -- concerns bond underwriters and investors were hashing out in legal documents, analysts said.
That reluctance may stem from fears the federal government would impose restrictions on institutions that use bailout programs -- concerns bond underwriters and investors were hashing out in legal documents, analysts said.
