bMighty vs. Bernanke: What's A TALF? And Why Should You Care?

Announced last November, the oft-delayed Term Asset-Backed Securities Loan Facility, or TALF, will finally write its first loans on March 25. The goal is to free up $1 trillion in consumer and small business lending.Don't know your TALFfrom your TARP? According to MarketWatch, the New York Fed will lend $200 billion to "owners of high-rated asset-backed securities, such as those backed by consumer loans, auto loans, student loans, credit-card receivables or small-business loans. Investors or companies holding these loans will be able to use them as collateral to obtain fresh funding from the government to extend credit to new customers worth up to $1 trillion."

Woo-hoo! The hope is that "The program will stimulate the economy by circumventing traditional credit channels that are now blocked up, the government said. With banks unable or unwilling to lend, even the most credit-worthy customers are finding credit hard to obtain."

Even better, "The program could be expanded to cover securities backed by auto or equipment leases, or to commercial mortgages, residential mortgages or collateralized debt obligations."

And new rules announced today mean that companies that get involved with TALF won't be subject to the compensation limits imposted by TARP. Which may mean the program will be adopted more widely.

Sounds good, right? But as always, The rANT wants to know if TALF will do any good for small and midsize companies? Well, if the abilty to borrow more money is the key to your company's success, it might help. If your problem is dealing with existing debt, it's not clear how borrowing more will do much good. As for generating demand, The rANT says "don't hold your breath."

After all, Mr. Bernanke -- man The rANT loves to hate --is still worried that we could be facing "a prolonged episode of economic stagnation that would not only contribute to further deterioration in the fiscal situation, but would also imply lower output, employment and incomes for an extended period."

The rANT replies: "Yikes!"