The U.S. Treasury Department will reduce the amount of credit protection it provides for the Term Asset-Backed Securities Loan Facility set up during the financial crisis.
The Federal Reserve’s board of governors agreed today that the Treasury could reduce credit protection to $1.4 billion from $4.3 billion, according to a statement today from the Fed.
Under the program, announced in November of 2008, the Fed lent funds to investors in highly rated asset-backed securities and commercial mortgage-backed securities. The Fed said $71 billion was lent under the program. The Treasury department provided credit protection on the loans through the Troubled Asset Relief Program, known as the TARP.
“This announcement represents another important step in winding down TARP successfully,” Timothy Massad, Treasury assistant secretary for financial stability, said in a statement. The program “succeeded in helping make sure American families and businesses could still get the auto loans, consumer loans and small business loans that they depend on every day, and it is on track to do so without incurring any loss to the taxpayer.”
The Fed said that most loans under the program have been repaid or matured, and loans outstanding are down to $5.3 billion.
“To date, the program has experienced no losses and the Board continues to see it as highly unlikely that recourse to TARP funds will be necessary,” the Fed said.
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